ACCC to probe low interest on deposits as Treasurer Jim Chalmers fumes at banks

Banks have been put on notice to pass on the Reserve Bank’s higher interest rates to savings, as high inflation sparks a rise in unemployment and home sales slump.

Banks have been put on notice to pass on the Reserve Bank’s higher interest rates to savings deposits as high inflation sparks a rise in unemployment and home sales slump.

The nation’s jobless rate climbed slightly to 3.7 per cent in the past month, according to new figures from the Australian Bureau of Statistics, with the situation expected to worsen as inflation fuels a cost-of-living crisis.

Treasurer Jim Chalmers on Thursday said the rise in unemployment was still expected to continue up to the “middle fours” as the economy slowed.

“I’m certainly concerned that we’ll have inflation in our economy which is higher than we’d like for longer than we’d like and even as the unemployment rate most likely ticks up a bit more,” he said.

New figures from Housing Industry Association (HIA) showed a 46.7 per cent decline in new home sales in January compared to a year ago as rate rises also cooled demand for properties.

Treasurer Jim Chalmers has told the banks to cough up on interest rates applied to savings. Picture: NCA NewsWire / Gary Ramage

As NAB and Commonwealth bank posted huge profits, Mr Chalmers again urged all banks to “pass on the interest rate rises to savers as quickly as you pass on the interest rate rises to mortgage holders”.

“I understand that people are furious, when mortgage rates go up more or less immediately, and savings rates go up much slower or not at all,” he said.

“This is the reason why I’ve asked the ACCC to do some work in this space.”

Mr Chalmers also hit back at reports he did not speak to Reserve Bank of Australia governor Philip Lowe on rates, arguing the pair talked “frequently” about the economy.

“We do talk about the pressures on the economy, the steps that the government is taking and the steps that the Reserve Bank is taking,” he said.

Mr Chalmers said, as with past treasurers, there was “no pressure” from him on what interest rates should or should not do out of “respect” for the independence of the RBA.

Opposition treasurer Angus Taylor said the latest jobs data was an “ominous” early sign of a “dangerous combination” of high inflation alongside job losses.

“Higher cost of living, job losses,” he said.

“These are the outcomes that are the worst-case scenario for Australians under the current circumstances and we need a government with a coherent plan that can deal with those issues.”

Australian Banking Association chief executive Anna Bligh said banks “stand ready” to assist the ACCC in an “open and transparent manner”.

“The purpose of the ACCC inquiry is to determine how savers are benefiting from a higher interest rate environment and I expect that the final report … will provide clearer answers on how banks are dealing with this issue,” she said.

This week NAB announced an 18.7 per cent jump in cash earnings to $2.15 billion in the last three months to December 31.

Commonwealth Bank announced a cash net profit after tax of $5.15bn for the last six months of 2022.

On Thursday, ANZ announced it expected the RBA would continue to raise rates for the next two more months in a row, up to 4.1 per cent in May this year.

The bank does not expect any easing in the cash rate until November 2024.

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Originally published as ACCC to probe low interest on deposits as Treasurer Jim Chalmers fumes at banks