Business call to Banks - Show us the Rate Cuts
Statement by Greg Evans - Director of Economics and Industry Policy
The Australian Chamber of Commerce and Industry has welcomed the move by most of Australia’s banks to fully pass on the official rate cut in the pricing of their variable rate home loans.
Disappointingly, however, the banks do not appear to have extended the same benefit to business. The rates that apply to many of the finance products used by small and medium enterprises have not changed.
There is no reason why business borrowers utilising an overdraft facility or other products such as fully drawn advances should not receive the entire benefit of the 0.25% reduction in official rates.
We now urge the banks to come forward and reprice their facilities which are relied on by mainstream business across Australia. It’s certainly not clear at the moment when this will happen and by how much the banks intend to move.
The Reserve Bank indicated in the aftermath of the global financial crisis that Australia’s banks were too slow and did not move far enough in reducing loan rates to business and they attributed this solely to less public pressure applying to business lending relative to the focus on the home loan market.
We don’t want a repeat of these circumstances otherwise it will substantially lessen the impact of the rate cut and the intention of the central bank in assisting those weaker areas of the economy.
The message is clear, the commercial banks need to pass on rate cuts to business and they should do it now and not think the lack of focus and visibility in this area allows them the comfort of delay and inaction.
For More Information:
ACCI’s Director of Economics:
Greg Evans 0407 204 559
ACCI’s Director of communications:
David Turnbull 0419 272 802