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The current trend for banks to move interest rates out of sync with the official cash rate will likely become the status quo, comments from banking chiefs suggested this week.
Ralph Norris, CEO of Commonwealth Bank (CBA), yesterday indicated that any cut in the cash official rate would not automatically translate into a cut in CBA’s lending rates.
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“[When cash rates ease], we will know what our funding costs are on a wholesale basis and then we will review our rates,” Mr Norris said, according to The Australian.
On Wednesday Andrew Thorburn, NAB head of retail banking, said it was a good thing the banks no longer moved in line with the RBA and it was quite possible that would remain the case.
“The cycle has been broken, and it should be, because the banks do not just fund off the cash rate; we have a whole different source of funds,” The Australian reported.
Published: 25-07-08
