Westpac have raised their interest rates yet again. The Sydney Morning Herald reported that the bank had raised its rate to 9.37%, following the National bank’s rise to 9.36% on Wednesday. The fact that they went higher than the National seems to be an invitation for the other major banks to get on the bandwagon and raise their rates as well. No doubt the other banks will accept this invitation.
Two things seems futile to me. Firstly, what is the point of the Reserve Bank setting interest rate rises, when the banks make up some nonsense story that nobody understands, and set the rates at whatever they feel like, much higher than the reserve Bank has declared.
Secondly, why are interest rates all around the world dropping drastically, yet Australia seems to be going exactly the opposite direction, with drastic increases? Westpac have stated the rates are rising because they are operating in a global economy where long and short-term funding costs are at record levels. The National simply cites the increased cost of wholesale funds.
Now I don’t really understand what either of those mean, and I suspect the banks hope most people have no clue what they are saying. I do, however, note that Wespac refers to a global economy. I assume this is the same global economy that other countries are operating in? Countries where the interest rates are falling.
It seems, in Australia at least, the banks can do whatever they want, with no fear of regulation by any authority.
20th March 2008