Don't expect banks to follow RBA: Kelly

by Adam Smith15 Dec 2011

Westpac chief Gail Kelly has joined the chorus of bankers warning borrowers may not be so lucky after the next RBA cut.

After several days of stalling, the big banks last week passed on the full 25bp Reserve Bank cut to mortgage holders, but Kelly has told reporters this may not be the case next time the RBA moves.

Fairfax has reported that Kelly warned of the possibility of tightening credit availability as the Eurozone economy worsens, and said many funding markets used by Australian majors had "effectively closed".

"And when they open up, our estimation is that the cost of raising money will actually be more than it was at any point during the global financial crisis," Kelly said.

Kelly called Westpac's decision to pass on the full RBA cut "finely balanced", and warned that banks may only pass on a portion of future cuts.

Related stories:

ANZ blinks first, second tiers and majors follow

Rate cut stalemate continues


  • by Aaron of Perth 15/12/2011 9:48:35 AM

    I'd feel more (or at any) sympathetic for the poor struggling banks, if they didn't report a multi-billion dollar profit for the last Financial Year.

  • by JERRY gIBB 15/12/2011 10:57:58 AM


  • by Mike H 15/12/2011 11:11:59 AM

    As we all know, the big banks are frustrating the efforts of the RBA in its attempts to regulate the economy with its rate policy. To my mind, a bank which doen's follow the movements set by the RBA is guilty of economic sabotage, which should be punishable by cancellation of its licence. Isn't it about time appropriate legislation was introduced to force them to toe the line? Gutless governments, all.