Business still fuming as banks stay quiet on rates

The business community has been harpooning the banking industry over its lack of action on interest rates, with only a few smaller banks having passed on the RBA’s 25 basis point cut from earlier this week.

While ANZ has moved its regular rate statements to the second Friday of each month, businesses – especially retailers – are still waiting on the remaining three banks to make a move.

However, both the Bank of Queensland and ING Direct have passed on at least part of the cut to their customers.

Russell Zimmerman, executive director of the Australian Retailers Association, told SmartCompany this morning he’s “not very impressed” by the silence of the banks, especially considering business is entering its most critical time of year.

“Retailers are getting stock this time of year, and will go into an overdraft position. So that’s incredibly important.”

“And from a consumer’s point of view, you’d hopefully want people using that saved money to spend a little in retail stores.”

Zimmerman points out most retailers are going to make 60% of their turnover in the December quarter. Businesses in that sector, he argues, “need that rate cut now”.

“I’m calling on the banks to show some leadership.”

While Council of Small Businesses of Australia chief executive Peter Strong admits the issue of interest rates is more complicated than common debate allows, he’s still disappointed the banks haven’t passed rate cuts on.

“I think there’s a mixture here of greed, keeping share prices up, and then there are other pressures as well in the banking world they have to consider as well.”

“But what the banks have to understand is that if they don’t pass the interest rate cut on, then the customers are going to struggle, and that means in turn that the banks will struggle.”

Australian Chamber of Commerce and Industry head of economies and industrial policy Greg Evans said earlier this week it was disappointing the banks hadn’t passed on the rate cut – and pointed out funding pressure on the banks had eased.

Peter Strong says while this is true, he’s also mindful of the fact banks have to deal with regulation of their own.

“It’s not just the banks’ problem; it’s the Australian Prudential Regulation Authority and the red tape they impose as well.”