Reserve Bank of Australia (RBA) has
played down the difference between its own interest rate cuts and those
made by commercial banks.
RBA governor Glen Stevens said that the bank's margins had fluctuated but
had been in a reasonably narrow range for a number of years.
The RBA cut the cash rate four times in 2012, taking it to 3.00 per cent
from 4.25 per cent. Most of these cuts were not fully passed on when
the major banks cut their standard variable lending rates.
After the RBA's most recent 25 basis point reduction in December, all
four major cut by only 20 basis points.
Mr Stevens repeated his point that the RBA had reduced the cash rate more
than it would normally in order to compensate for the commercial bank's
smaller reductions.
Mr Stevens told a parliamentary committee "central bank was willing
to cut the cash rate, currently at three per cent, further if necessary.
With the annual inflation expected to remain within the RBA's target
range of two to three per cent for the next two years,the central bank
had room to cut further if economic growth slowed."
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