Interest rates 'need to be passed on by banks'

Interest rates need to be passed on by the major banks to businesses and the Aussie on the street, according to leaders at the Australian Chamber of Commerce and Industry (ACCI).

Following on from its latest survey on investor confidence, the organisation found that many people are worried that even if interest rates are cut next month, the major banks may not implement the changes, the Australian Associated Press reports.

Director of economics and industry policy at the ACCI Greg Evans told reporters in Canberra that there is a "tug of war" between major banks and business owners.

"It underlines the lack of real competitive pressures in the Australian banking system," he commented.

Mr Evans added that cuts to interest rates would be absolutely vital in the first six months of the year and most economists believe that the first readjustment would be made on February 7th, with the official cash rate being revised down to four per cent.

The Herald Sun reported yesterday (January 24th) that the Reserve Bank is facing increasing pressure from struggling car manufacturers to lower interest rates.

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