Rate relief could be around the corner as funding pressures ease

by Adam Smith30 Mar 2012

Bank funding cost issues are "slowly going away" according to analysts, and an April cut should be on the cards.

Analysts have told the AAP that funding costs have fallen since lenders made the decision to hike rates in February. Bell Potter Securities banking analyst TS Lim said banks should be able to grant rate relief in April while defending profitability.

"There is a case for a cut this time around, if anything. The funding cost issue is slowly going away," Lim told the AAP.

JP Morgan banking analyst Scott Manning agreed, telling the AAP that there was now "less of a case" for out-of-cycle moves than when lenders increased rates in February.

But Nomura Australia analyst Victor German said banks may stay put on rates to monitor movements in credit markets, deposits and the direction of the official cash rate.

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