Commonwealth Bank and NAB pass on rates in full
Welcome back!
The Commonwealth Bank and NAB have passed on the rate cut in full after the RBA rate cut today where the Reserve Bank cut rates by 100 basis points.
Both banks have benefited from banking inflows which have made the task of providing the full rate easier than their competitors the ANZ Bank and Westpac.
The Commonwealth Bank announced they will pass their rate cuts onto new and existing customers from 12 December 2008.
RBA cut by 100 basis points
The Reserve Bank of Australia today announced a cut to the RBA interest rate of 100 basis points to 4.25%.
The rate cut reduces the RBA rate to it’s lowest level since December 2001. The RBA Chief Glenn Stevens indicated that more cuts are likely but they are unlikely to be in the range of recent cuts more along the lines of the traditional rate cuts of 0,25% to 0.50%.
The Commonwealth Bank, National Australia Bank and Westpac all reacted swiftly by cutting rates. The full rate cut was passed on my the Commonwealth Bank and the National Australia Bank but Westpac only passed on 0.80%.
NAB cut fixed home loan rates
NAB announced plans to cut their one year fixed interest home loan by 1% to 5.59%. The change takes effect on 1 December 2008.
The cut lowers the one year fixed introductory rate to 4.99% and the two year fixed home loan rate that also had a 1% cut to 5.59%.
The interest rate reduction from National Australia Banks comes ahead of the expected 1% cut from the Reserve Bank of Australia next week.
RBA Minutes of Monetary Policy for November 2008
The Reserve Bank of Australia released it’s minutes from it’s monetary policy meeting on 4 November 2008 today.
These minutes always make for interesting reading but even more so at a time when the economic environment is as dire as it is today.
Click on RBA to read the minutes from the Melbourne Cup day meeting when interest rates were cut.
RBA look to another 1% cut in December
The RBA will almost certainly cut rates again by 100 basis points or more after economic data from Australia and around the world is pointing to a global recession.
Last night Europe announced that the 15 countries that make up the Eurozone has fallen into recession amid worsening economic conditions.
A day earlier the economic powerhouse of Germany announced they had fallen into recession amid the global crisis of confidence affecting markets.
The fear of ongoing job cuts around the world driven by corporate cutbacks is now widespread with acute pain being visable throughout Europe and the US. The fear and panic their has spread to other regions and Australia may be heading down the same path.
Australian markets have been savaged over the last six months and consumers have stopped spending hoarding available cash in case of job cuts or harder economic times ahead.
This fear will force the RBA into another major rates cut in December that could see 100 basis points cut from the official rate to 4.25%. More cuts will follow next year as the economy is expected to experience a very tough 2009 amid corporate job cuts and record low consumer confidence.
How big do you the December rate cut will be? Add your comment today.
RBA cut growth forecast to 1.5%
The RBA today announced a cut to the growth forecast to the end of December of 1.5%, this is down from the IMF forecast of 1.8% and the 2% forecast only in August.
The RBA announcement was in the November Statement of Monetary Policy. The RBA also forecast a drop in the inflation rate to 3% by the middle of next year.
It would seem the RBA statement further vindicates future cuts to the RBA rate. The interbank futures are already factoring in a forecast RBA rate of around 4% and various investment bankers expect the RBA rate to fall to 4% by the middle of next year.
Australian Inflation hits 50% in Sep quarter
The Australian Bureau of Statistics announced today that Australia’s headline inflation rate came in at 5.0% on an annual basis. The CPI rose 1.2% for the quarter ended 30 September 2008.
The inflation rate was the highest since 1995 as CPI excluding housing, financial and insurance services rose by 0.7% in the September quarter for an annual rate of 3.8 per cent.
The rate excluding volatile items was 4.6% annually, this is the inflation rate more often considered as the most accurate reading of inflation by the RBA.
The RBA had earlier indicated an expectation of the inflation rate to be around 5.0% and the high rate is unlikely to deter the RBA from making future cuts to interest rates.
The RBA have indicated that the inflation rate is likely to subside in 2009 as the economic slowdown take further hold on the domestic economy.
Click ABS to read the Media Release.