Pass this rate cut on, Bollard tells banks

New Zealand's banks have been told to pass on the benefits of today's record 1.5 percentage point cut in official interest rates.

Alan Bollard announcing the 1.5pc cut today. Images / Mark Mitchell, Christoph Lukasser

 Making his move this morning, Reserve Bank governor Alan Bollard made it clear the bank wants today's cut to make its way to consumers. He pointed out that profit margins for the banks were stable or growing.

"To ensure the response we are seeking, we expect financial institutions to play their part in the economic adjustment process by passing on lower wholesale interest rates to their customers," he said.

ASB Bank, Kiwibank and SBS Bank (formerly the Southland Building Society) are the only banks to have responded to today's cut by reducing rates.

ASB has cut its variable rate from 8.7 per cent to 7.95 per cent, while SBS has cut from 9.15 per cent to 7.2 per cent.

Kiwibank today cut its floating rate from 7.95 per cent to 7.45 per cent, its six month rate from 7.49 to 6.99 per cent, its one year fixed term 6.99 per cent to 6.49 and its 2 year rate from 7.59 to 7.19.

To read the full NZ Herald article click here

Posted: 4 Dec 2008

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