Australia's coalition government continues to lecture banks about interest rate pricing policies for the sector, at least as they relate to residential mortgages.
Prime minister John Howard told a media conference yesterday that "My advice to the banks and the Treasurer's advice to the banks is that what you charge has to be something that has to be determined entirely by the cost of your funds,"
The Australian reported.
"Australia's bank are very profitable and increases in interest rates not directly related to official interest rates need to be very carefully justified to the Australian public.
"No bank has a right, in our view, to take advantage of a general change in climate in relation to something like the sub-prime to justify an increase in rates."
Banks have already increased interest rates, in line with much higher cost of funds, on personal loans, credit cards and margin loans within the retail banking segment, and on most variable loan products within business and corporate banking.
Some retail banks, including Adelaide Bank, Cititbank and AMP Banking have all increased some variable home loan rates, a point still lost on Howard and any media following him in the course of the general election.