Wednesday, December 16, 2009

Monetary policy already "back in the normal range" - Reserve

And the Bank says banks like Westpac helped get it there. Truly.

The key quote from Ric Battellino's extraordinary speech, just delivered...

"Taking these considerations into account, it would be reasonable to conclude that the overall stance of monetary policy is now back in the normal range, though in the expansionary segment of that range."

It's worth reading the whole thing:

Some Comments on Bank Funding

Related Posts

. A third interest rate hike. Let's be honest about why.

. Green light - Reserve gives banks the all-clear to nudge up rates

. Six easy graphs - the story of the Australian economy


carbonsink said...

Ric finally says something sensible.

Good to see that depositors are getting close to the cash rate these days. May the 'deposit war' continue for years to come.

Stephen Kirchner said...

"The margin on variable housing loans is much the same today as it was at the start of the crisis."

Kind of puts all the bank-bashing by politicians and others into perspective, doesn't it Pete!

Anonymous said...

Actually they are higher Stephen.

There isn't any data in the speech to suggest there is more competition in the banking sector

Peter Martin said...

Stephen, I wrote about this on Friday November 20, on page 1.

The Reserve Bank has given Australia's banks a green light to top up their mortgage rates declaring that their mortgage margins "have actually declined a little over the past two years".

The assessment by Reserve Bank Assistant Governor Guy Debelle delivered to a banking conference in Sydney is at odds with jawboning by the Treasurer who has attacked banks over attempts to widen their margins.

I was right about it giving banks the green light.

But I also noted:

Dr Debelle told the conference the private banks gentle treatment of mortgage holders had been "more than offset by a widening in business and personal loan margins, so that overall bank margins have widened, as is evident in the banks’ most recent profit statements."

That too puts the bank-bashing by politicians and others into perspective.

And there's also this point:

The banks had things exceptionally good two years ago. Times are tougher now. There's no logical reason why their profitably from mortgages should return to where it was in 2007.

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