Dont hold your breath...
http://www.businessday.com.au/business/banks-see-good-times-2-rates-20090325-9ajw.html
Banks see good times, 2% rates
Danny John and Eric Johnston
March 26, 2009
THE big bank bosses have declared Australia has weathered the worst of the global financial crisis, with some predicting official interest rates as low as 2 per cent later this year as the Reserve Bank attempts to keep the economy pumping.
Bankers acknowledge their image has taken a battering in the crisis, with National Australia Bank admitting there was a perception banks had been profiteering from fees or failing to pass on in full interest rate cuts.
In a wide-ranging speech to the Australia-Israel Chamber of Commerce, NAB's chief executive, Cameron Clyne, said banks had failed to explain the pressures on their own funding costs and how these had affected their ability to price mortgages.
"Let me be straight: there are issues where many people think the banks can be *******s and the challenge I am setting for the NAB is to lift our game," he said.
Still, Mr Clyne remained upbeat, given the signs of confidence emerging in economic indicators. With markets finally responding to moves by governments around the world to stabilise the financial system, he said the downturn in Britain and the US appeared to be "relatively close to the bottom".
In a separate presentation in Hong Kong, ANZ's chief executive, Mike Smith, said the Rudd Government and the RBA still had plenty of firepower to direct against the economic downturn.
He believed further interest rate cuts were in the pipeline and that the official cash rate was likely to drop to just 2 per cent in the second half of the year. The Reserve board will consider further cuts to official cash rates when it meets next week. Most economists are tipping the central bank to cut rates by 50 basis points.
Mr Smith said lower interest rates were feeding through to home loan repayments more rapidly than they were in the US and Britain.
Lower rates were helping household budgets, along with more stable petrol prices. The individual savings ratio was likely to recover "dramatically" during 2009 and beyond.
And disposable income was rising after a tough 18 months.
Mr Smith told a Credit Suisse investment conference that these trends were related to the Federal Government's two stimulus packages, where $52 billion was being used to shore up domestic growth.
The Government's response to the global crisis had been "rapid and substantial". The commitment was the world's fourth largest such financial injection when measured as a percentage of gross domestic product - exceeded only by China, the US and India.
But even with last year's budgeted surplus of $22 billion forecast to turn into a deficit of the same amount, the Government's net debt of 5.2 per cent of GDP by fiscal 2012 would still be extremely low by international standards and well below the likes of Japan, the US, Britain and Europe as a whole.
Australia was "relatively well placed" to weather what Mr Smith accepted would be a very tough year for the global economy.
Source: The Sydney Morning Herald
http://www.businessday.com.au/business/banks-see-good-times-2-rates-20090325-9ajw.html
Banks see good times, 2% rates
Danny John and Eric Johnston
March 26, 2009
THE big bank bosses have declared Australia has weathered the worst of the global financial crisis, with some predicting official interest rates as low as 2 per cent later this year as the Reserve Bank attempts to keep the economy pumping.
Bankers acknowledge their image has taken a battering in the crisis, with National Australia Bank admitting there was a perception banks had been profiteering from fees or failing to pass on in full interest rate cuts.
In a wide-ranging speech to the Australia-Israel Chamber of Commerce, NAB's chief executive, Cameron Clyne, said banks had failed to explain the pressures on their own funding costs and how these had affected their ability to price mortgages.
"Let me be straight: there are issues where many people think the banks can be *******s and the challenge I am setting for the NAB is to lift our game," he said.
Still, Mr Clyne remained upbeat, given the signs of confidence emerging in economic indicators. With markets finally responding to moves by governments around the world to stabilise the financial system, he said the downturn in Britain and the US appeared to be "relatively close to the bottom".
In a separate presentation in Hong Kong, ANZ's chief executive, Mike Smith, said the Rudd Government and the RBA still had plenty of firepower to direct against the economic downturn.
He believed further interest rate cuts were in the pipeline and that the official cash rate was likely to drop to just 2 per cent in the second half of the year. The Reserve board will consider further cuts to official cash rates when it meets next week. Most economists are tipping the central bank to cut rates by 50 basis points.
Mr Smith said lower interest rates were feeding through to home loan repayments more rapidly than they were in the US and Britain.
Lower rates were helping household budgets, along with more stable petrol prices. The individual savings ratio was likely to recover "dramatically" during 2009 and beyond.
And disposable income was rising after a tough 18 months.
Mr Smith told a Credit Suisse investment conference that these trends were related to the Federal Government's two stimulus packages, where $52 billion was being used to shore up domestic growth.
The Government's response to the global crisis had been "rapid and substantial". The commitment was the world's fourth largest such financial injection when measured as a percentage of gross domestic product - exceeded only by China, the US and India.
But even with last year's budgeted surplus of $22 billion forecast to turn into a deficit of the same amount, the Government's net debt of 5.2 per cent of GDP by fiscal 2012 would still be extremely low by international standards and well below the likes of Japan, the US, Britain and Europe as a whole.
Australia was "relatively well placed" to weather what Mr Smith accepted would be a very tough year for the global economy.
Source: The Sydney Morning Herald
