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RATE CUT WELCOME - TIME FOR BANKS TO PASS ON THE SAVINGS
The Reserve Bank’s 1% cut to official interest rates is welcome news, but the real test will be how quickly and how much of the cuts are passed on to business, according to the region’s peak business group, the Illawarra Business Chamber.
“For the fourth consecutive month the RBA has reduced the cash rate, but the gap between official rates and business interest rates continues to widen”, said Illawarra Business Chamber CEO Mark Grimson.
“While the cash rate has come down sharply in recent months, the full benefits have not been passed onto business.
“Over the past year, the margin between the cash rate and business overdraft rates has steadily climbed. Most recently we’ve seen the gap widen to nearly six percentage points.
“Take for example the period from September to November when the cash rate fell by 1.75%, yet at the same time, business overdraft rates fell by just 1.15%, widening the margin with the RBA rate to 5.85%.
“It’s simply not acceptable for the gap between the RBA and business and home loans to continue widening in this way.
“At a time when the NSW economy is slowing, business confidence is plunging and unemployment is on the way up, business owners and employers who are the engine room of the state’s economy deserve a break.
Illawarra Business Chamber has over 680 members who in turn employ over 42,000 people in the Illawarra.
