Bank hikes could force RBA's hand

by Adam Smith02 Mar 2012

Borrowers have high hopes that bank rate hikes will move the RBA to cut rates when it meets next week.

A poll by Loan Market has found that 44% of borrowers believe the recent decision by lenders to move independently of the Reserve Bank will prompt the RBA to cut the official cash rate on Tuesday. Twenty-seven per cent believed the bank rate hikes will at least play a factor in the RBA's decision.

A Loan Market spokesman predicted a cut by the RBA next week would "put a lot of pressure on lenders to follow suit" despite bank claims that the cost of funding has become increasingly detached from the cash rate.

"While the fundamentals of the Australian economy remain quite strong and consumer sentiment has been improving, sections of the economy can only benefit from the stimulus provided by lower interest rates," he said.

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