cba boss expects interest rates to drop

CBA boss expects interest rates to drop
Email Print Normal font Large font February 14, 2007 - 12:14PM

Commonwealth Bank of Australia Ltd (CBA) chief executive Ralph Norris says the interest rate cycle has probably peaked and that he expects the next move in rates will be down.

Mr Norris said the general view in the market at the moment was that inflationary pressures had moderated.

"I think at this point the view would be that we've probably seen the top of the interest rate cycle," he told journalists.

"At the moment, I think the general view is that inflation has moderated.

"If the current status quo prevails then I would expect the next interest rate move will be down."

Mr Norris also said that three interest rate rises in calendar 2006 by the Reserve Bank of Australia had failed to weaken its mortgage book.

"Our position is still very strong, we don't see any systemic issues in our mortgage book," he said.

"We have seen a very slight increase in arrears in January but nothing that would give us any cause for concern."

Australia's second largest bank reported a 10 per cent lift in net profit to $2.191 billion for the half year ended December 31.

Its underlying cash net profit was $2.271 billion, up 19 per cent, which was above analysts expectations of a result around $2.154 billion.

At 1113 AEDT, CBA shares were up 10 cents to $51.70.

© 2007 AAP

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