The Reserve Bank appeared to reflect Finsec sentiments earlier this week when it argued that banks need to think about broader economic imbalances. Deputy Governor, Grant Spencer, agreed that banks are managing their individual risks adequately, but continued:
“However, it is not clear that banks are taking appropriate account of the systemic risks associated with the rapid growth in their aggregate lending.”
Likewise, the CTU has called for bank economists to stop blaming inflation on low unemployment and look to their own bank behaviour. CTU President, Ross Wilson, noted:
“In a tight housing market such as we have experienced in the last few years we get very high price rises – a 38.5% rise between 2004 and 2006 – but in a tight labour market, we have been getting only modest wage increases.”
“So banks should look in the mirror. They are borrowing huge sums offshore, driving up the current account deficit and helping fuel house price inflation that is forcing houses way out of reach for workers trying to buy their first home.”
Finsec continues to argue that one way inflationary pressure can be reduced is for banks to stop pressuring staff to sell debt products such as mortgages at the expense of high quality customer service.
(thanks to the Reserve Bank for the photo)
...the gossip 
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