Westpac cuts interest rates as wholesale rates fall

Thursday 20th November 2008

Westpac New Zealand reduced its home loan, business and farm lending rates, in response to a decline in wholesale market rates.

The reduction comes after criticism of banks from the Employers and Manufacturers, who have claimed lenders are "profiteering" by not passing on the full impact of central bank interest rate cuts.

Westpac today lowered its rates by 0.75 basis points, including a reduction in credit card rates. Acting chief executive Bruce McLachlan said Westpac opted not to wait until December4, when central bank governor Alan Bollard is expected to slash the official cash rate by 100 basis points.

"We are pleased to be able to pass on to consumer, business and farming clients the benefits of an easing in wholesale rates," McLachlan said. "We want to send a strong signal, by doing this, that we are open for doing good and fair business with our customers who are facing a tough economic environment."

The December 4 rate cut "is already being priced into the wholesale rates," he said. Three-month bank bills have tumbled from 8.04% to 5.83% since the start of October, according to Reuters data.

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By Jonathan Underhill

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