Banks dovetail towards a prudent past

Australian banks are racing to secure a bigger depositor base to fund their lending. This cautious strategy will have the effect of seeing a convergence in rates – a result of competition, not collusion.

Last week’s response by three of the four major banks to the Reserve Bank’s 50 basis point reduction in official interest rates has revealed a broad new convergence in their domestic strategies. That doesn’t mean they are colluding.

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