Banks may be forced to lift rates

Banks may be forced to raise interest rates even if the Reserve Bank does not warned Treasurer Wayne Swan.

Even though Mr. Swan was delighted with the better than expected economic growth in the June quarter, he stated that the global financial pressures were still having an impact. It could force the banks to lift rates before the Reserve Bank.

He went on further to say that there may well be a time when events in international markets increase the cost of global funding and increase to the point, where rates may be pushed up by the banks but they would have to have an extremely good reason for doing so.

Government Bank Deposit Guarantee will stay for 3 more years

Mr. Swan further stated that interest rates would have to rise as economic conditions improved, and that the bank deposit guarantee was part of the reason why the Australian economy was able to grow despite uproar around the world.

The Federal Government has said that it will leave the bank deposit guarantee in place for three years and will look at term funding guarantee for banks when global financial conditions stabilise.

These guarantees were put in place in October last year, when the global crisis was at its peak shortly after the collapse of US investment bank Lehman Brothers, and when the banks were struggling to raise funds on the global markets.

The guarantee will be up for discussion at this weekend's G20 meeting of finance ministers in London.

Get your quotes now

What to find out more? Enquire now

Published on September 9-rd, 2009 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

More on this topic

Enquire about Home Loans
Please enter the estimated value of the property

Important Information

Not all providers in the market are included in the comparison.

Any information or advice contained on this website is general in nature and has been prepared without taking into account your objectives, financial situation or needs.

Related Topics