Press release / the Social Credit Party: The move by banks to pre-empt a rise in the OCR and increase interest rates is just cynical profit gouging, preying on customers who have borrowed at the record low interest rates the banks have been offering.
The banks should immediately bring them back down.
Those interest rate rises will affect not just home owners, but businesses, the very sector of the economy that needs to retain staff and ramp up production of goods and services to meet the demand in the economy.
Crying wolf with their predictions, bank economists have been trying to frighten the markets, the media and the commentariat into talking up the possibility of a hike in the Official Cash Rate.
It’s been an attempt to bully the Reserve Bank into lifting the OCR so that their bank employers could justify the increase in their rates that will add to their already bloated profits.
International credit agency Fitch concurred saying yesterday that the increases “may be positive for banks’ profitability and earnings due to increased returns on bank assets, particularly loans.”
Those bank economists have been wrong with their predictions for years so why would anyone, the media in particular, take any notice of their scaremongering on the OCR.
They’ve been saved this time by the level 4 lockdown which has given them an excuse to reverse their ‘predictions’.
The Reserve Bank needs to establish just who is in charge of the country’s financial system – itself or the commercial banks.
It should direct banks to cut interest rates on business overdrafts as these are currently exorbitantly high, and channel a greater proportion of their lending into the business sector to providing working capital for businesses to expand and increase production. The Bank could share a portion of the risk.
It could also adapt its Funding For Lending programme to provide funds for banks at zero interest provided the banks make a significant drop in lending rates on working capital to businesses.
Falling into the trap of raising the OCR will lift interest rates and exacerbate inflationary pressures, resulting in increased costs, reduced production and hardship for businesses and home owners.
The Reserve Bank governor should listen less to the bank economists and more to Shamubeel Eaqub, Bernard Hickey and Sam Stubbs.
They’re independent and they’re on the right track.