Friday, November 09, 2007

BANKS CRY POOR

Bank claims on interest rates ring hollow

The long suffering banks are sounding serious. They cry they will be forced to pass interest rate rises to borrowers in excess of the official rise of .25%. Most are talking imminent rises of .5%.

The reason being provided is that instability in international credit sources means banks are themselves paying a premium for cash required above what they are holding in deposits.

So why are we not seeing more incentive in the deposit markets?

The two banks I use, HSBC and Commonwealth have not raised their savings deposit rates following either recent rate rises. It would seem to be a logical way of boosting deposits and reducing exposure to international sources of funds.

Looks more like a profit lunge than a cash shortage driving interest rate rises in excess of Reserve Bank movements.