An inconvenient truth
If you are wondering whether the banks will pass on any future rate cuts, you should first ask whether they actually can. Political pressure on banks to pass on rate cuts has continued to intensify. This has contributed to creating a flawed notion that bank funding costs move in lock step with the RBA’s cash rate. If you tracked the movements of mortgage rates and the cash rate between 1998 and 2007 you could be forgiven for thinking that.
This information has been prepared by Perpetual Investment Management Limited (PIML) ABN 18 000 866 535, AFSL 234426. It is general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. You should consider, with a financial adviser, whether the information is suitable for your circumstances. The views expressed in this article are the opinions of the author at the time of writing and do not constitute a recommendation to act. Any information referenced in the article is believed to be accurate at the time of compilation and is provided by Perpetual in good faith. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor's capital.

