Rates cut again but banks play their own game as usual
Another rate cut by the Reserve Bank of Australia (RBA) – to a new historic low of 0.75 per cent – and another case of the big four banks failing to quickly pass on the cut, in full, to consumers. Situation normal?
None of the big four had passed on the rate cut in full as their interest margins become squeezed and profits trimmed, Nine is reporting. Commonwealth Bank of Australia (CBA) was the only one of the big four to move, offering a 0.13 percentage point cut on standard variable lending rates. Investor-only loans will get the full 0.25 percentage point reduction while deposit rates will be reduced by 0.05 per cent.
“What this means for an Australian family with a mortgage of $400,000 is $720 less a year in interest payments,” said Treasurer Josh Frydenberg.
What this means for retirees with money in the bank is a further challenge.
KPMG chief economist Brendan Rynne said “a short, sharp fiscal boost” was missing and that raising the Newstart allowance was a way to achieve that.
Government house economics committee chair Tim Wilson described the rate cut as “disappointing” and said: “The price of money is not an issue. I’ve yet to be convinced cuts have any positive impact. The reverse is likely by discouraging savings and those who have to spend.”
The RBA will reportedly consider implementing “unconventional monetary policy measures including printing money to buy government bonds if interest rates hit 0.5 per cent” as expected in February.
Mr Frydenberg said the Government was focused on creating more jobs and ensuring the economy continued to grow.
How do you plan to grow any savings that are currently sitting in a bank account?