Westpac knocks down rate-cut possibility
Monday April 6, 2009
Westpac boss Gail Kelly has dampened expectations of the banks passing on in full any interest rate cut from the central bank on Tuesday.
Mrs Kelly said the banks were paying more for deposits, and the costs of wholesale funding sourced offshore was 'higher than it's ever been'.
'The costs of funding have continued to go up,' she said on the Seven Network's Sunrise program.
The board of the Reserve Bank holds its monthly meeting on Tuesday to consider, inter alia, official interest rates.
But the remaining nine believe the official cash rate will be kept at its 45-year low of 3.25 per cent.
Debt futures markets have priced in a 25 basis point cut on Tuesday.
This would leave the cash rate at three per cent, it lowest since March 1960 when the average rate was 2.99 per cent.
A 50 basis point cut would put it under the all-time low of 2.89 per cent in January 1960.
The RBA left official interest rates on hold in March, after cutting by 400 basis points over five meetings between September last year and February.
The banks have passed on around 360 of those basis points to consumers in rate cuts.
Sky News
