ID :
22923
Mon, 10/06/2008 - 21:02
Auther :
Shortlink :
http://m.oananews.org//node/22923
The shortlink copeid
Govt prepared to take hit in rate debate
(AAP) Federal Treasurer Wayne Swan has conceded the government might lose support for not pressing banks to pass on in full a rate cut expected on Tuesday.
The Reserve Bank of Australia (RBA) is widely expected to cut official interest
rates by half a percentage point in an effort to shield the Australian economy
against further fallout from the global economic crisis.
But the treasurer on Monday refused to demand commercial banks pass on the entire
rate cut to borrowers, saying it was vital to strike the right balance between
relief for families and a strong banking system.
"We may take a hit in the opinion polls, but it's more important to be responsible
than popular," Mr Swan said.
The opposition maintains that the banks are highly profitable and can afford to pass
on the full RBA rate cut.
Mr Swan said Australian families had every right to expect banks to pass on as much
interest rate relief "as is responsible".
"When conditions normalise, we also expect banks to pass on any further relief
promptly," he said.
Mr Swan accused Opposition Leader Malcolm Turnbull of running a populist line on the
issue, saying the stability of the Australian banking sector was too important for
political point scoring.
"Mr Turnbull's behaviour is not just populist. It's also risky and reckless at a
time of global uncertainty - he thinks he knows better than the expert regulators."
Reserve Bank governor Glenn Stevens has reportedly told Prime Minister Kevin Rudd
that squeezing the banks too hard could make it unprofitable for them to lend and
push the Australian economy into recession.
However, opposition treasury spokeswoman Julie Bishop said passing on the full RBA
cut would help keep people in jobs and the Australian banking sector stay strong.
"One of the most important ways to keep our financial sector strong is to ensure
that Australians keep their jobs so that they can pay off their mortgages ... their
bank loans," she told reporters in Perth.
"And that is why if there is an interest rate cut tomorrow it should be passed on in
full so that people can keep their jobs and keep paying off their financial
obligations."
Ms Bishop said the banks should explain at what point their bottom line would be
affected.
"Are we talking about the banks breaking even, or are we talking about the banks
preserving their record profits?" she said.
"We believe that the benefit of an interest rate cut must be passed on to the
broader economy, to stimulate the economy, and not preserve the record profits of
the banking sector."
The banking sector was hit hard on Monday as the Australian sharemarket plunged to
its lowest close in almost three years, after Friday's approval of a $US700 billion
($A913 billion) Wall Street bailout failed to lift investors' spirits.
The benchmark S&P/ASX200 and the all ordinaries indices both fell about 3.3 per cent.
The Australian dollar slipped to a two-year low against the US dollar, dropping
three US cents to just under 75 US cents, and a three-year low against the Japanese
yen.
The Reserve Bank of Australia (RBA) is widely expected to cut official interest
rates by half a percentage point in an effort to shield the Australian economy
against further fallout from the global economic crisis.
But the treasurer on Monday refused to demand commercial banks pass on the entire
rate cut to borrowers, saying it was vital to strike the right balance between
relief for families and a strong banking system.
"We may take a hit in the opinion polls, but it's more important to be responsible
than popular," Mr Swan said.
The opposition maintains that the banks are highly profitable and can afford to pass
on the full RBA rate cut.
Mr Swan said Australian families had every right to expect banks to pass on as much
interest rate relief "as is responsible".
"When conditions normalise, we also expect banks to pass on any further relief
promptly," he said.
Mr Swan accused Opposition Leader Malcolm Turnbull of running a populist line on the
issue, saying the stability of the Australian banking sector was too important for
political point scoring.
"Mr Turnbull's behaviour is not just populist. It's also risky and reckless at a
time of global uncertainty - he thinks he knows better than the expert regulators."
Reserve Bank governor Glenn Stevens has reportedly told Prime Minister Kevin Rudd
that squeezing the banks too hard could make it unprofitable for them to lend and
push the Australian economy into recession.
However, opposition treasury spokeswoman Julie Bishop said passing on the full RBA
cut would help keep people in jobs and the Australian banking sector stay strong.
"One of the most important ways to keep our financial sector strong is to ensure
that Australians keep their jobs so that they can pay off their mortgages ... their
bank loans," she told reporters in Perth.
"And that is why if there is an interest rate cut tomorrow it should be passed on in
full so that people can keep their jobs and keep paying off their financial
obligations."
Ms Bishop said the banks should explain at what point their bottom line would be
affected.
"Are we talking about the banks breaking even, or are we talking about the banks
preserving their record profits?" she said.
"We believe that the benefit of an interest rate cut must be passed on to the
broader economy, to stimulate the economy, and not preserve the record profits of
the banking sector."
The banking sector was hit hard on Monday as the Australian sharemarket plunged to
its lowest close in almost three years, after Friday's approval of a $US700 billion
($A913 billion) Wall Street bailout failed to lift investors' spirits.
The benchmark S&P/ASX200 and the all ordinaries indices both fell about 3.3 per cent.
The Australian dollar slipped to a two-year low against the US dollar, dropping
three US cents to just under 75 US cents, and a three-year low against the Japanese
yen.
