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Australia govt. furious over banks rate hike

Posted on: June 14, 2009


AFP – Friday, June 12

SYDNEY (AFP) – – Australia has reacted angrily after one of the country’s major banks took the surprise step of hiking interest rates, raising fears others would follow suit.

Prime Minister Kevin Rudd said Australians had “every right to be furious,” adding the Commonwealth Bank was endangering the government’s efforts to keep afloat in the global recession.

“Australians have every right to be furious with today’s decision by the Commonwealth Bank to increase its home loan rate, hindering the efforts of the government, the RBA and the business community to stimulate the economy during this global recession,” Rudd said, according to the ABC website.

“We’re all in this together, businesses, workers, government, the Reserve Bank. And today’s decision by the Commonwealth Bank runs counter to this nationwide effort.”

Treasurer Wayne Swan also slammed the bank after it raised its variable home loan rate by 10 basis points to 5.74 percent to offset higher long-term funding costs.

“This is a selfish decision by the Commonwealth Bank which will hinder the efforts of the Commonwealth Government, the Reserve Bank and the Australian community to support jobs during a global recession,” Swan said.

But the bank denied its move would upset Canberra’s efforts to keep the economy afloat, which have included a 42 billion Australian dollar (34.5 billion US) stimulus package.

Since September, the central bank has slashed its rates from 7.25 percent to 3.0 percent, a 49-year low.

“Our rates continue to be very low; in fact, the rates are at the lowest level in nearly 40 years,” said Commonwealth Bank head of retail products Michael Cant.

“Rates are extremely low and will continue to stimulate the economy.”

The CBA has also confirmed that some home loans with fixed interest rates will rise by 0.1 percentage points from 5.13 to 5.23 per cent.

The government has credited its stimulus efforts with last week’s surprise rise in first-quarter growth, which warded off a widely expected technical recession.

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