More pressure is being placed on the banking industry as it refuses to pass on Tuesday’s interest rate cut, although experts are warning SMEs it shouldn’t expect much movement.
Canstar Cannex this morning told SmartCompany that the big four banks passed on last month’s rate cut to small business products – but about three weeks after the Melbourne Cup rate cut, and not in full.
The financial comparison site says the cuts ranged from 16 basis points to 25 points, and there were doubts the same levels would be passed on this time around.
Meanwhile, assistant treasurer Bill Shorten has continued to breathe down the banks’ necks, saying they need to “share the love” with customers and pass on rate cuts as soon as possible. He told Sky News this morning the silence was “deafening”.
“To be silent and do nothing is counter-productive to the Australian economy,” Shorten said. “No one wants to go first or last – that’s not leadership.”
“In the case of the banks they should remember that while they’ve got some smart people working for them, it’s the Australian taxpayer, Australian government and customers who helped contribute to their profits. Loyalty is a two-way street.”
But business customers are reeling as well. Last month banks took several days to announce rate cuts to businesses – despite having announced cuts for home owners immediately after the RBA’s move. Even then, not all the banks passed on the full cut.
Experts suggest businesses shouldn’t expect much. CommSec economist Craig James wrote yesterday the RBA could cut rates again in February, which would allow the major banks room to wait to pass on cuts.
And opposition small business spokesman Bruce Billson says the Government needs to keep the banks accountable.
“In the public’s mind the Reserve Bank rate has been created as the only thing that seems to matter,” he said. “We know that’s not the case, there are other influences at play.”
However, some suggest businesses and homeowners shouldn’t give up hope. Canstar analyst Adam Beu told SmartCompany this morning there is still time for banks to announce cuts.
“Everyone sees rate cuts and expects them to be cut instantly, but situations with funding doesn’t always allow that.”
“There is still plenty of time for banks to announce what they are going to do.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
