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The Interest Rate Cuts – Do Banks Have a Responsibility to Pass Them On?

Homeowners breathed a sigh of relief this week when the Reserve Bank cut interest rates by 25 basis points. Let’s face it – any day that the interest rates go down rather than up has to be a good day.
So the big guns have made the decision and now homeowners play the waiting game for the four major players to deem whether they will pass on the savings. To many of those enslaved to a mortgage this waiting time can easily be resented. It’s a simple equation really. The Reserve Bank has made the decision because they believe that it is in the best interest of the economy. For the cuts to have an impact on the economy they need to passed on to the consumers. Right?
Well apparently no. At least according to the banks. It appears that their benefit takes precedence over the consumers and the Australian economy. So how do they justify their arrogance or do they just have a secret ambition to be the most despised industry?
From the propaganda that they proliferate it would appear that they justify their actions by claiming overseas lending as being the main factor for not passing on the cuts. Hmmm…. and yet they still manage to announce massive profits at the end of each financial year? Seriously doesn’t wash. Yes they have a responsibility to their shareholders however they also have a responsibility to the Australian economy and the Australian consumer. After all how long will their massive profits continue if the Australian economy goes into a major funk and consumers default on their loans? And one thing is for sure if the latter does happen – you can guarantee that the four major players will be the first ones with their hands out to the Government pleading for assistance. And the Australian consumer? Well hey…. we’ll be the mugs that pay the banks twice – once when we don’t receive the benefit of a rate cut and a second time when the Australian Government uses our taxes to bail them out. Go figure.