Decisions made by Australian banks with regard to their mortgages have a direct impact on the country's interest rate level, a senior official has revealed.
Dr Philip Lowe, deputy governor of the Reserve Bank of Australia (RBA), said today (16 February) that the central institution has no choice but to take heed of the direction of home loan rates before making any policy calls.
During a speech delivered in Sydney, Dr Lowe also stated that the object of the country's official cash rate is to push borrowing costs towards where the RBA wants them.
"Ultimately what we are doing is setting the cash rate to influence lending rates in the economy because that really matters when people make their savings and lending decisions," he added.
This comes after Leon Carter, national secretary of the Finance Sector Union, said last month that all major banks across Australia are considering the possibility of making job cuts in 2012.
By Tony Aynsley
