Treasurer Wayne Swan has intensified the pressure on the major banks to limit any increase in lending rates following moves to unwind the government's guarantee for wholesale funding.
In a pre-emptive shot at lenders, Swan told parliament the removal of the guarantee would not materially affect bank funding costs so there was "absolutely no justification" for them to raise rates at a faster pace than the RBA, according to a report in The Australian Financial Review.
While some have criticized the removal of the guarantee, Swan was unapologetic.
Rather, he said it attested to the strength of both the financial system and the overall economy.
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Govt withdraws bank guarantee - The Rudd government is withdrawing the guarantee scheme for large deposits and wholesale funding on the 31 March.