‘It’s just hot air, there’s nothing you can do’: Leigh Sales grills Treasurer Josh Frydenberg and questions why he is powerless to force the greedy banks to pass on interest rate cuts in full
- The Reserve Bank slashed the cash rate, and big banks have left customers out
- Josh Frydenberg was quizzed over what government pressure can achieve
- ‘It’s hot air, isn’t it? There is nothing you can actually do about it?’ – Leigh Sales
- Frydenberg says buyers must move with the market to put big banks on notice
The ABC’s Leigh Sales has roasted Treasurer Josh Frydenberg over the big four banks’ refusal to pass on the interest rates cuts to customers in full.
Frydenberg appeared on ABC’s 7.30 on Tuesday after the Reserve Bank announced it would cut the official cash rate by 25 basis points to 0.75 per cent, the lowest in Australia’s history.
While the rate cuts are promising for customers, the big four banks have failed to implement them in full, with the Commonwealth Bank losing only 0.13 of a percentage point off its interest rate.
There is no legislation forcing the banks to apply the cuts for customers, prompting Sales to question what government pressure could actually achieve.
Leigh Sales (pictured) has questioned Treasurer Josh Frydenberg as to what the government can do to force banks to pass on interest rate cuts to customers
‘Let’s level with the viewers,’ Sales said. ‘It’s hot air, isn’t it? There is nothing you can actually do about it?’
Mr Frydenberg responded that customers should be aware of what is available on the market to put the big banks on notice.
‘We continue to put pressure on the banks and ultimately it is the customers who can vote with their feet and go to their bank and seek the best possible deal,’ Mr Frydenberg replied.
‘And if not take the business elsewhere.’
‘It is a pattern of behaviour by the banks. When the previous government was in, there were 14 rate cuts and only five were passed on in full.’
But he flagged five of the smaller lenders had passed on the rate cuts in full.
‘The big banks may have thumbed their nose at the customers but some of the smaller lenders have actually done the right thing,’ Mr Frydenberg said.
The rate cut is the third since June and the first time the official rate has been below one percent.
The big four banks have been roundly criticised for refusing to pass on the cuts in full, with Prime Minister Scott Morrison accusing the banks of ‘profiteering.’
‘We continue to put pressure on the banks and ultimately it is the customers who can vote with their feet and go to their bank and seek the best possible deal,’ Josh Frydenberg (pictured) said. ‘And if not take the business elsewhere’
‘They’ll put their explanations out there and the public will judge them based on what they say but I’m not buying it,’ Morrison said.
Westpac and ANZ joined the Commonwealth Bank and NAB on Wednesday to reveal their standard variable rates would drop between 13 and 15 basis points instead of the full 25 basis points.
ANZ did pass on the full rate cut for people paying interest-only home loans.
All four banks opened share trading lower on Thursday morning, following a second day of significant falls on Wall Street.
The banks state they needed to keep some margins in a low interest rate environment, and protect customers who save deposits.