Banks waiting for election to raise rates

The result of pressure on funding costs means that the major banks are likely to raise interest rates outside of official hikes by the Reserve Bank of Australia said the chief operating officer of regional lender Bank of Queensland Ram Kangatharan. “As the pressure continues on the majors, they would want to move outside the RBA rates, I think what’s holding them back is election year,” Mr Kangatharan said.

The RBA held official rates steady at 4.50 per cent when its policy board met this week. “On the wholesale side, things are getting tougher, sustainable retail deposit growth is pretty tough in this environment. All of the banks are starting to feel the pinch in terms of deposit margins.” Mr. Kangatharan said.

Source: Money AU/Dow Jones