Originally published in The Sydney Morning Herald on November 5, 2010

Australia’s banks seem to have embraced the credo that if you are going to tell a lie, you might as well tell a big one. One of the biggest is that when the Reserve Bank lifts official interest rates, the banks have no choice but to pass on the rate rise in full to their home loan customers. This sounds credible on a first hearing, but it simply doesn’t fit with the way banks operate nowadays.

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