Bill's Transcripts

Melbourne Talk Radio – interview with Steve Vizard

Read or listen to my interview with Steve Vizard on MTR about interest rates.

Interview on MTR Mornings with Steve Vizard

Subjects: interest rate cuts, ALP National Conference.

Steve Vizard:

Well the RBA in its last meeting for the year cut interest rates again yesterday and again by quarter of a percent, but it looks like the big four banks again aren’t going to pass it on. If they are they are remaining schtum.

On the line is Assistant Treasurer Minister for Financial Services and Superannuation, the Member for Maribyrnong,  Bill Shorten joins me. Bill, good to talk to you.

Bill Shorten:

Good morning Steve.

Steve Vizard:

Should the banks pass this interest rate cut on?

Bill Shorten:

Yes, absolutely. What we need in Australia at the moment is confidence. Nothing contributes to confidence like the idea you might be paying less on your mortgage, which means there is more to spend in retail, more to save. It just makes a big difference to the mood of the nation. Australia is doing better than the rest of the world, but we do need to see cash flowing through our economy and if it’s just going to the banks and they don’t pass on the rate cuts than that gives a nasty blow to business – both small and big – and of course the mortgage holders.

Steve Vizard:

I mean that’s whole point of monetary policy isn’t it, that the Reserve Bank through all of the financial intermediaries via the tool of interest rates is supposed to stimulate or contract the economy. That is what monetary policy is about. They’ve taken the cuts. They’re going to use it for their bottom line and they’re not going to pass them on. That makes monetary policy very difficult, doesn’t it?

Bill Shorten:

It does. Does anyone seriously think that if the Reserve Bank increased the cash rate of 25 basis points the banks wouldn’t move? If rates were going up, they’d be moving their rates up. When the cash rate goes down, it gets all sticky all of a sudden. So the point is, monetary policy, what you said is exactly right. It’s a $50 phrase, but what it means is we have an independent bank, which I think works better than what the Europeans have as it is generally independent. When they think th