The Reserve Bank of Australia has decided to keep the official cash interest rate on hold, but claims have been made that borrowers are still being left in limbo by the recent trend for lenders to raise their rates independently of any RBA decision.
“For two months, lenders have been independently moving their variable interest rates by modest amounts. It’s proving difficult for many consumers to predict exactly where rates are headed when it appears the RBA currently holds minimal influence,” said Loan Market corporate spokesman Paul Smith.
While the economic troubles in Europe remain a concern, a cautiously optimistic statement from the RBA pointed to moderate expansion in the US economy, as well as sustainable growth in China’s economy as much needed positive signs for the Australian economic outlook.
It also hinted at the potential for rate drops in the near future, noting that “were demand conditions to weaken materially, the inflation outlook would provide scope for easier monetary policy”.
Should a rate cut be forthcoming in the coming months, Smith believes that the banks “would be under enormous pressure to move as well”.
Chan & Naylor director Ken Raiss joined the chorus of voices calling for banks to get back in line with the RBA, making the worrying claim that “if and when the Reserve Bank does reduce rates, banks will use the change to boost their own profitability.”
“Despite assertions by the Big Banks, they need to accept their share of responsibility for creating a sluggish housing market,” he added.
The official cash rate remains 4.25%, with the RBA’s next interest rate decision coming on Tuesday 1 May.
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