While welcoming yesterday's decision by the Reserve Bank of Australia to cut interest rates by 0.25 percent, the National Farmers Federation has urged bankers to pass on the full reduction to rural borrowers.
NFF president Duncan Fraser said the rate cut, bringing the official cash rate to a record low of 2.75pc, came at an ideal time for primary producers, who in many areas were facing a ‘perfect storm’ caused by the high A$, increased input costs, softening commodity prices, a return to dry or drought conditions and the cost of accessing finance.
“While farmers in some parts of Australia are enjoying good seasonal conditions, in other areas, a return to dry seasons combined with these other pressures is causing undue concern to the agricultural sector,” Mr Fraser said.
“And agriculture is not alone. In making the decision to cut rates this week, the RBA has acknowledged the impact that the high A$ and weakening commodity prices are having on the wider Australian economy – and, a week out from the Federal Budget, the Government’s revenue.”
“We urge the rural lending sector to pass this rate cut on in full to our farmers.”
Just last week NFF released its April Agribusiness Loan Monitor, showing that the banks have not been passing on the RBA’s interest rate cuts in full.
“Since July 2012, the official cash rate has fallen by 0.50pc, and yet the banks have each passed on somewhere between 0.15 and 0.40pc of these cuts,” Mr Fraser said.
“And given that in recent days, three of the major banks have each announced record six monthly profits, we believe they have the capacity to do so.”
“We call on all rural financial lenders to pass the 0.25pc rate cut on in full,” he said.
- The NFF’s April Loan Monitor is available via the NFF website: www.nff.org.au. The Monitor is compiled each month by money market monitor Canstar and published by the NFF as a tool for all Australian farmers and graziers.
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