Banks Did Swan A Favour

By AR - The conventional wisdom is that interest rate rises by the RBA hurt the government politically. Interest rate rises which occur outside the RBA's cycle however can easily be blamed on the profit-hungry banks. And blame the banks is exactly what Treasurer Wayne Swan did earlier this year when he condemned lenders for "excessive" rises and urged mortgagors to "vote with their feet". But it seems that the Big Bad Banks did Swan a favour when they raised their rates off cycle in January as this dissuaded the RBA from raising the official interest rate by 50 basis points in February, instead raising it only 25 points.

Swan should be thanking the banks, rather than demonising them and inspiring futile anger in their customers.

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