Banks should pass on the full amount of yesterday’s rate cut – Social Credit

The Social Credit party is calling on the country’s banks to pass on to borrowers the full amount of yesterday’s cut in the OCR rate by the Reserve Bank.

At a time when banks are making more profit then they ever have, despite tightening economic conditions, they should not be holding back some of the OCR cut to further increase their already massive profits.

Home buyers in the country’s largest cities, and first home buyers particularly, have faced massively over inflated house prices, and they deserve to feel the full benefit of the Reserve Banks’ move.

Additionally businesses needing working capital and the capacity to upgrade or install new technology to become more productive and benefit the country’s economy should not be disadvantaged by banks not reducing their lending rates on current and future loans by the full amount of the Reserve Banks’ cut in rates.

On the other hand, given the banks massively increasing annual profits, banks have no need to chop their deposit rates for savers by the same extent, especially given that the loans they make are not funded from savings of those depositors, but rather by them creating new money out of thin air as pointed out by both Bryan Gaynor and Bernard Hickey in articles in major newspapers recently.

New Zealanders should be the beneficiaries of the Reserve Banks’ move, not foreign shareholders of the country’s major banks.