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Banks urged to follow Reserve Bank's lead

Banks urged to follow Reserve Bank's lead

Banks should reduce their lending rates following the Reserve Bank's cut in the Official Cash Rate this morning according to the Wellington Regional Chamber of Commerce.

"Businesses will be pleased that the Reserve Bank went ahead with a one percentage point reduction and that some banks have acted to reduce their rates already," said Chamber CEO Charles Finny.

"We urge other banks to follow suit.

"Today's move will narrow the gap between New Zealand and other countries and will ultimately provide a much needed boost to confidence.

"We agree with Reserve Bank Governor Alan Bollard's assessment of the domestic and global economy. We also note his caution regarding domestically generated inflation (particularly in labour costs, local body rates and electricity prices), and urge parties to show constraint in their pricing decisions.

"We are pleased that some banks have already acted and expect the competitive nature of the New Zealand banking system to deliver further reductions.

"It is now up to the rest of the banking sector to pass on these reductions to both businesses and households quickly," Mr Finny concluded.

ENDS

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