Grattan / Turnbull tells banks to pass on the whole interest rate cut

Share Canberra's trusted news:

michelle grattan

PRIME Minister Malcolm Turnbull has sternly told the banks they should pass on the whole of Tuesday’s rate cut – or their chief executives must explain why they are not doing so.

After the Reserve Bank cut the cash rate by 25 basis points to 1.5%, the four big banks said they would pass on only part of the reduction. They have also said they are putting up their term deposits rates, to a greater or less extent.

Turnbull said the banks should be fully accountable. “It is up to them. They are big institutions. They operate with a very substantial social licence and they owe it to the Australian people and their customers to explain fully and comprehensively why they have not passed on the full rate cut and they must do so,” he said.

“They can’t just say ‘oh, it’s none or your business. Please don’t tell us how to run our business’.”

The banks should pass on the cut because it reduced their cost of funds, Turnbull said.

His tone was considerably tougher than that of Treasurer Scott Morrison on Tuesday – while Morrison said the banks should pass on the cut, he allowed them more slack than Turnbull has done.

“There is no real argument based on cost of funds that would mean that they shouldn’t pass [the cut on],” Morrison said. “But I do note that they have actually taken another action and that is to lift deposit rates. So you’ve got to look at the deposit rate increase and the mortgage rate decrease as a package of response from at least the two banks that have done that. But it’s for them to make that decision.”

The government is under some pressure on the broad issue of banks’ behaviour, with Labor running hard in the election campaign on its call for a royal commission into the banks.

The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Who Can You Trust?

In a world beleaguered by spin and confused messages, there's never been more need for diverse, trustworthy, independent journalism in Canberra.

Who can you trust? Well, for more than 25 years, "CityNews" has proudly been an independent, free, family-owned news magazine, serving the national capital with quality, integrity and authority. Through our weekly magazine and daily through our digital platforms, we constantly and reliably deliver high-quality and diverse opinion, news, arts, socials and lifestyle columns.

If you trust our work online and believe in the power of independent voices, I encourage you to make a small contribution.

Every dollar of support will be invested back into our journalism so we can continue to provide a valuably different view of what's happening around you and keep free.

Click here to make your donation and you will be supporting the future of journalism and media diversity in the ACT.

Thank you,

Ian Meikle, editor

Previous articleElectric heater fault destroys Braddon home
Next articleShane moves to outlaw religious vilification

Leave a Reply