The Commonwealth Bank has announced it will not be passing on the full 0.75 percent interest rate cut handed down
The Commonwealth Bank has announced it will not be passing on the full 0.75 percent interest rate cut handed down by the Reserve Bank today, ignoring the calls of industry and the Prime Minister.
The first to react to the decision, CBA today announced a 0.58 percent cut effective Monday November 10.
Retail Banking Services Group Executive Ross McEwan says the bank was unable to pass on the full amount due to a “significant increase in all three elements of our cost funding over recent weeks”.
Yet it was only a few days ago Prime Minister Kevin Rudd put the banks – particularly the majors – on notice, saying there was no reason why they could not pass the whole cut on.
Business groups such as the Australian Chamber of Commerce and Industry, Australian Retailers Association and the Australian National Retailers Association have all since echoed this sentiment.
Although the banks are claiming to be doing it tough, a number of their customers may fail to lend some empathy after the latest Commonwealth Bank-ACCI Business Expectations Survey for November – also released today – showed general business conditions and the business economic outlook have hit a fourteen year low due to the impact of slowing domestic demand and recent international financial market instability.
ACCI Director of Industry Policy and Economics Greg Evans says this shows the extremely difficult trading conditions faced by business.
Retailers have been hit particularly hard, with the latest Australian Bureau of Statistics figures for the sector showing a modest 0.2 percent growth in September, compared with 0.7 percent the year before.
As a result the Australian National Retailers Association says this has filtered through in the loss of 7,800 full-time jobs in the past twelve months.