Banks called on carpet over interest rates
Bank CEOs will face a grilling in Canberra over their interest rate decisions.
The big four banks have come under increased scrutiny following their decision to pass on only a portion of the Reserve Bank’s 25 basis point cash rate cut. While Prime Minister Malcolm Turnbull has resisted calls from the Federal Opposition to hold a royal commission into the banking industry, he announced yesterday that major bank executives would be called to appear before the House of Representatives standing committee on economics at least once a year.
"What this will do is create a regular and permanent method of accountability and transparency for the banks," Turnbull said.
Australian Bankers Association chief executive Steve Munchenberg said the move to call banks before the committee was unprecedented.
“The Federal Government is entitled to call the banks before a parliamentary committee, however no other businesses are required to justify their commercial pricing decisions in this way,” he said.
Munchenberg argued that banks had “explained repeatedly” that the RBA cash rate did not determine their funding costs.
“About two-thirds of bank funding comes from deposits and banks have raised interest rates on a range of those deposits, even as the Reserve Bank cut the cash rate,” he said.
Nevertheless, all four major bank chief executives said they welcomed the opportunity to appear before the committee and explain the factors influencing banks’ funding costs.