NSW Premier Dominic Perrottet has called on the banks to think twice before passing on Tuesday’s Reserve Bank (RBA) rate hike, imploring financial institutions to “look after” struggling families.
Australia’s interest rate now sits at 3.35 per cent after the RBA hiked rates by 25 basis points in its ninth consecutive rise.
Of the big four banks, ANZ and NAB have passed on the full increase, which will come into effect from February 17. Commonwealth and Westpac have yet to announce their stance.
Appearing on Today, Mr Perrottet accused the financial institutions of “double standards” when it came to passing on rate hikes in full but ignoring rate cuts.
Mr Perrottet was NSW Treasurer from 2017 to 2021 when falling cash rates hit historic lows of 0.1 per cent in November 2020. He said just once did the banks pass on the rate cuts in full.
“It is double standards. It is not about the Reserve Bank and the rate,” he said.
“It is about the fact that when the Reserve Bank was cutting rates, the banks weren’t there. But they’re certainly there when they’re increasing them.”
Mr Perrottet, who is taking the NSW Coalition to the polls on March 25, called on the banks to look “after families in a difficult economic time”.
“There’s economic challenges coming our way right across the country and it is time for the banks, in difficult times, to look after their people,” he said.
“We’re going through challenges. Family budgets around the state are under pressure.”
Cash rate feared to hit 4.1 per cent
While most analysts were expecting the 25 basis point rise, RBA governor Philip Lowe warned families that global economic uncertainty and stubborn inflation highs could lead to more rate hikes.
In December, Australia’s consumer price index (CPI), which measures household inflation, reflected a 7.8 per cent increase year-on-year, marking the largest annual increase since 1990.
“The board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary,” Dr Lowe said.
Speaking to NCA NewsWire, former RBA economist and economics lecturer at Monash Business School, Isaac Gross, forecast another three rate hikes in March, April and May.
“That would get you to 4.1 per cent and I think that’s bottom of the range now. We could be going well into the fours,” Dr Gross said.