CBA adds to clamour for independent rate hikes


Thursday 14 October 2010

CBA has become the latest major Australian bank to suggest that interest rates will have to rise independently of the Reserve Bank's (RBA) cycle.

Cba has also pointed to the possibility of independent rate rises content

Speaking at a business lunch in Sydney, Commonwealth Bank chief executive Ralph Norris noted that the additional costs of liquidity and capital are going to have "an upward pressure" on rates going forward.

He also claimed that continuing volatility in global markets and sovereign debt issues are adding to the funding pressures.

"Movements in bank funding costs are impacted by more than just the RBA cash rate," commented Mr Norris. "Until we see some sort of normality get back into markets, but I don't see that happening quickly," he added.

Independent interest rate hikes could prompt more Australians to compare home loans and consider refinancing. Mr Norris's speech comes after Westpac boss Gail Kelly warned this week that the "costs of money for the next 18 months are going up".

The next RBA meeting to decide on any possible change to the official cash rate is on November 2nd.

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