ANZ chief issues warning about interest rates

ANZ chief executive Phil Chronican has warned that recent interest rate cuts alone will not necessarily be enough to encourage Aussies to spend more money.

The Reserve Bank of Australia (RBA) sanctioned a 25-point reduction last week, but none of the "big four" banks have passed this on to customers in full so far.

Commonwealth Bank and National Australia Bank announced that they would trim the interest rates attached to some of their products by 20 points, while Westpac will only introduce an 18-point cut.

ANZ is expected to make an announcement on its own rates later this week, but Mr Chronican feels that more needs to be done to boost spending levels across the nation.

He told ABC's Inside Business programme that the official cash rate – which stood at 3.5 per cent until last week – was already very low.

"I'm not sure there's a lot of merit in having interest rates cut as the only tool," he was quoted as saying.

Mr Chronican also highlighted the huge borrowing costs that banks are facing at the moment.

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