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Treasurer Wayne Swan has taken a pre-emptive shot at lenders, telling Parliament yesterday that the removal of the wholesale funding guarantee would not justify any rate rises outside those made by the Reserve Bank.
“The Australian people won’t tolerate any bank abusing their place in the Australian economy because of their strength,” Mr Swan said.
While some lenders, including the Bank of Queensland (BoQ), have criticised the government’s decision to remove the wholesale funding guarantee, Mr Swan was unapologetic and said the move was a testament to the overall strength of the economy.
BoQ’s chief executive David Liddy yesterday condemned the government’s decision to remove the guarantee and warned it could result in a battle for deposits.
“There will certainly be a grab for retail funding,” Mr Liddy told The Australian Financial Review.
“While the banks maintain higher funding costs, part of that will be passed on. It wouldn’t surprise me if there was movement outside of the cash rates.”
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