Banks are quick to pass on rate rises in full, but not rate cuts, Perrottet says
New South Wales Premier Dominic Perrottet has called on banks to think carefully before passing on Tuesday’s Reserve Bank hike, asking them to “look after” struggling families.
Appearing on Today, Perrottet accused banks of having “double standards” when it comes to passing on rate hikes in full but failing to do the same with rate cuts, The Australian reported.
“It is double standards. It is not about the Reserve Bank and the rate,” Perrottet said. “It is about the fact that when the Reserve Bank was cutting rates, the banks weren’t there. But they’re certainly there when they’re increasing them.”
The RBA hiked rates for the ninth consecutive time Tuesday, bringing the cash rate to 3.35%. Of the big four banks, ANZ and NAB have already passed on the full increase, effective Feb. 17. Neither Commonwealth Bank nor Westpac have yet announced their intentions, The Australian reported.
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Perrottet, who was NSW treasurer from 2017 to 2021, when cash rates hit historic lows of 0.1%, said that only once did the banks pass on the rate cuts in full. He called on the banks to “look after families in a difficult economic time.”
“There’s economic challenges coming our way right across the country and it is time for the banks, in difficult times, to look after their people,” he said. “We’re going through challenges. Family budgets around the state are under pressure.”
Further hikes expected
Tuesday’s rate hike was foreseen by most experts. However, RBA governor Philip Lowe warned that continued inflation meant that more hikes were almost certainly on the way.
“The board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and this period of high inflation is only temporary,” Lowe said Tuesday.
Former RBA economist Isaac Gross told NCA NewsWire that he expected another three rate hikes, in March, April and May.
“That would get you to 4.1%, and I think that’s the bottom of the range now,” Gross said. “We are going to be well into the fours.”
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