The top two men in the Government have stated that Commonwealth Bank's interest rate rise is not justified and that the public should be furious.
The Commonwealth Bank will raise the interest rates on their home and business loans by 10 basis points to offset higher funding costs. The rate on their standard variable loan will rise to 5.74 per cent from 5.64 per cent, from today.
Interest rates on a range of their fixed home loans and their residentially secured Better Business loan will also rise by 10 basis points from today. The increase in fixed rates does not affect their existing customers.
Ross Mc Ewan CBA's group executive of retail banking services has stated that the CBA made this decision reluctantly.
Both the Prime Minister and the Federal Treasurer feel that the CBA's decision to raise interest rates is uncalled for.
Mr. Swan also added that the decision by the Commonwealth Bank got in the way of interest rate relief, measures to stimulate the economy and to support jobs. He felt that Australians had the right to be furious with the Commonwealth Bank for obstructing the efforts of the Commonwealth Government, the Reserve Bank and the community to support our economy during the global recession.
Mr. Rudd further stated that Australians were all in this together - businesses, workers, government and the Reserve Bank - and Friday's decision by the Commonwealth Bank runs counter to this nationwide effort.
Joe Hockey treasury spokesman for the opposition felt that the Rudd Government was to blame by incurring substantial new debt and that we would end up with higher interest rates.
CBA is the first major bank in Australia to lift interest rates on its mortgages since the RBA commenced cutting the official rates in September 2008. Michael Cant CBA'S head of retail products said that the Commonwealth Bank was still the most competitive player in the market for home loans, and that their rate was still the lowest of all major banks.
CBA cited increased wholesale funding costs and the cost of funding deposits as the reason for its interest rates decision.