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LENDING & CREDIT | Cesar Tordesillas, New Zealand

ANZ takes credit for delaying interest rate cuts

ANZ is claiming credit for initiating independence from the central bank in determining interest rates.


Beginning 2012, the ANZ has set its interest rates on the second Friday of each month, regardless of whether the Reserve Bank had shifted its key cash rate at its monthly meeting.

The ANZ's stance has at least created some certainty of when the bank will reveal its rate plans. The RBA this week lopped another 25 basis points off the official rate but customers of the other major banks remain in the dark about when any changes will be announced.

"ANZ wanted to stop the 'dog and pony show' that occurs after the Reserve Bank changes rates and we've done that by setting a particular date on which we will inform our customers how we will respond,” said Paul Edwards, ANZ's general manager of corporate communications.

The banks tend to benefit by any delay in passing on interest rate cuts on to customers holding variable loans, such as mortgages. At the size of Tuesday's rate reduction, the bank profits swell by about $6.2 million a day, according to Australia Institute estimates.

An industry source said most lenders are "just sitting there waiting for ANZ to make their decision."

It's not just the big four banks - ANZ, Commonwealth, NAB, Westpac - that are holding back. The Bank of Queensland acted within minutes recently to cut its variable lending rate by 20 basis points, retaining five basis points of the RBA reduction.

A handful of over lenders, such as credit unions, have also updated their interest rates, but Bendigo and Adelaide Bank, Suncorp are among the bigger institutions waiting for others to move first.

Commonwealth Bank and Westpac said interest rates remained under review today. NAB also reiterated its commitment to offering the lowest standard variable rate of the big four.

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