Will lowering of US rates impact negatively on Australian Banks?

I have heard that if US fed lower their rates that could affect our banks adversely.

A: I don’t think the lowering of rates by the US Federal Reserve will have any negative impact on Australian banks. It is probably not that great for US banks, but I don’t think that should follow through locally.


If the Australian Reserve Bank lowers rates, that’s a negative for our banks in the short term, but probably a positive medium term. In the short term, margins get squeezed as banks can’t cut (any further) the rates they pay on their deposits (cheque accounts are already 0%, many savings accounts pay interest at just 0.01%). In the medium term, should lead to a pick-up in loan growth plus keep bad debts at historically low levels.

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