BOQ 'throws down gauntlet' to big banks

9 Feb 2012, 6:00 pm   -   Source: AAP
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Treasurer Wayne Swan says the Bank of Queensland is doing the right thing by its customers by keeping its rates unchanged in line with the RBA's decision.

Treasurer Wayne Swan says the Bank of Queensland (BOQ) has thrown down the gauntlet to the major banks by promising not to raise its lending rates out of step with the central bank's decisions.

The ANZ Banking Group is to hold its rate setting meeting on Friday amid concerns the big four banks may start lifting mortgage and business rates, to try to offset rising funding costs driven by the European debt crisis.

But BOQ managing director Stuart Grimshaw said on Thursday the middle-tier bank, which has more than 280 branches nationwide, will keep its standard variable home loan interest rates steady, in line with the unexpected decision this week by the Reserve Bank of Australia (RBA) to leave the cash rate unchanged.

"We understand many home owners and small business owners are concerned about out-of-cycle interest rates and want to take this opportunity to reassure our customers that we won't be increasing our standard variable interest rates at this stage," Mr Grimshaw said in a statement.

Mr Swan said the government's banking reforms had put power back in the hands of consumers and have supported smaller lenders like BOQ so they can put competitive pressure on the big banks.

"It's great to see Bank of Queensland really throwing down the gauntlet to the big banks to do the right thing by their customers," the treasurer said in a statement.

The RBA will get the chance to expand on its reasoning for leaving the cash rate at 4.25 per cent - a 25 basis point cut was widely expected - when it releases its quarterly statement on monetary policy on Friday.

Macquarie Bank chief economist Richard Gibbs expects interest rate policy is now more likely to be steered by the unemployment rate with inflation having shifted to the sidelines.

Mr Gibbs expects the RBA may now hold fire on rates until May, keeping plenty in reserve should there be more ructions in Europe, while bracing for the potential substantial "fiscal drag" with the government adamant in bringing the budget to surplus.

"It wouldn't be the first time the Reserve Bank has gone in early May (ahead of the budget) anticipating what fiscal policy will be set at," he told AAP.

Mr Swan said the economy remained very much the envy of the world, and he remained committed to a surplus in 2012-13.

"We are determined to deliver it, and we will deliver it," he said in a ministerial statement to parliament on Thursday, adding that it will assist the RBA to ease monetary policy should conditions require.

Mr Swan believes actions by the European central bank that have extended the maturity of its lending to European banks, and a new fiscal compact within Europe, had helped to calm global sentiment in recent weeks.

"But more is needed given the scale and significance of the problems that Europe faces," Mr Swan said.

"So, I cannot offer today an assurance that 2012 will not be as challenging as 2011 for the global economy."

Opposition treasury spokesman Joe Hockey said it was curious that Mr Swan's statement, which was supposed to be about the global economy, mentioned Australia's budget five times.

"I can only conclude that he has linked these two aspects, so if he fails to deliver his promised surplus on 2012-13, which we will find out in September 2013, he can just blame the global environment," Mr Hockey said.

"He blames everyone else for everything that goes wrong in this world. He never accepts responsibility for his own actions."

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