banks would owe us rate cuts : rudd

Doubt if the banks will take notice of his comments.


August 13, 2008
BANKS owe it to their customers to pass on any reductions in the official interest rate, Prime Minister Kevin Rudd says.

Mr Rudd said the banks' large profits in recent years meant they owed Australian working families who were now under financial pressure after repeated rises in lending rates.

Reserve Bank of Australia (RBA) Governor Glenn Stevens indicated last week that the central bank may cut interest rates soon, but retail banks have yet to give any guarantee they will follow suit.

In its quarterly statement on monetary policy released yesterday, the RBA said the costs to Australian banks of borrowing money and then lending to the public had begun to ease.

Mr Rudd said in Perth today that passing on the central bank's official interest rates, when they moved, was the "right and reasonable thing'' for the banks to do.

"What I'd say to the commercial banks is this, if you're registering in these economic circumstances a 7 per cent increase in profit - and I'm all for our companies being profitable - it's a part and parcel of the market economy.

"But if you're a bank generating significant profits - and commercial banks have been generating significant profits in recent years - I would say that those banks owe it to working families, where working Australians are under financial pressure at the moment, that when official interest rates move that those moves should be passed on to consumers.''

Treasurer Wayne Swan and Deputy Prime Minister Julia Gillard have already called for banks to pass on any Reserve Bank rate cuts.