17 Jun 2009

Bank rejects call for interest rates inquiry

5:50 pm on 17 June 2009

Westpac says there is no need for a parliamentary inquiry into interest rates, saying the sector is competitive, highly regulated and the performance of individual banks is transparent.

Banks were criticised at a recent parliamentary finance and expenditure select committee meeting, with MPs saying that the mortgage interest rates people pay have only edged down while the benchmark Official Cash Rate set by the Reserve Bank has plummeted.

Prime Minister John Key has cast doubt on the value of an inquiry, which Labour and the Green support.

Westpac chief executive George Frazis says the critical factor for the economy is that banks are still lending to firms and households.

Last week, the Reserve Bank said retail banks had room to drop floating and short-term lending rates further, while a parliamentary select committee criticised banks for not passing on rate cuts.

Reserve Bank figures show lending to businesses has fallen since last year to nearly $78.5 billion in April, while agricultural borrowing has jumped. Household lending rose modestly.