Fed: Swan says expects major banks to pass on in full any rate cut

AAP General News (Australia)
08-21-2008
Fed: Swan says expects major banks to pass on in full any rate cut

BRISBANE, Aug 21 AAP - Treasurer Wayne Swan says he expects all the major banks to
pass on any interest rate cut by the central bank.

Mr Swan was speaking after National Australia Bank (NAB) today guaranteed it would
lower its rates.

"Certainly, it's a victory for National Australia Bank customers who have been doing
it tough after eight interest rate rises in three years," Mr Swan told reporters.

"This decision by the National Australia Bank is a challenge for other banks to follow."

The Reserve Bank of Australia (RBA) is expected to cut official rates by at least a
quarter of a percentage point after its board meeting on September 2.

NAB today promised it would lower its standard variable mortgage rate by the same amount
if the cut went ahead.

The major banks have previously said they can't guarantee that they will be able to
pass on any rate cut in full to their customers.

"There is a public expectation and there is a government expectation that banks follow
the Reserve Bank," Mr Swan said.

"They follow them when they go up; they should follow them when they go down.

"I expect the major banks to pass on rate cuts if and when the Reserve Bank takes that decision.

"Just as banks put their rates up in a nanosecond when official rates went up, they
should follow the Reserve Bank down when official rates come down."

The nation's biggest mortgage lender Commonwealth Bank of Australia today said it could
not pre-empt what the RBA will do.

"The RBA has not announced any reduction in the official cash rate at this time and
we cannot speculate on what they will do," CBA said.

"It is in our interest to pass on as much as we can to our customers and to remain competitive.

"We will review our full costs of funding at the time of any announcement by the RBA,
taking into account any reduction in the official cash rate and do our best to pass on
as much as we can to our customers."

AAP ew/pe/klm/it/bwl

KEYWORD: RATES SWAN 2ND LEAD

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