By Chris Zappone
It's mid-summer, Australia's winning in the cricket, the seasonal retail frenzy's subsided and there's no Reserve Bank interest rate decision to stir the beach or poolside slumber.
The RBA may be taking its annual break from setting its cash rate on the first Tuesday of each month but for once borrowers can't completely switch off in January - particularly those banking with the ANZ.
January has typically offered borrowers a break from interest rate anxiety - but not this year.
The bank, whose ads proclaim "We live in your world," will instead invade it when it breaks with tradition on Friday and begins monthly announcements of its interest rates independent of both the central bank and its competitors.
The ANZ's rates verdict will land about lunchtime for the east coast states - presumably before the Third Test between Australia and India gets underway (1.30pm, AEDT), for those anxious to return to summer's pastime.
The bank revealed its plan in December to set its own lending rates on the second Friday of each month in a bid to break the public's expectation that it would or should follow in lock-step with the RBA. Rather than quelling speculation about interest rates and the banks' response, though, the ANZ's decision to go it alone may only extend anxiety over rates by adding another variable.
“No matter what happens the media will report on the ANZ's independent stance - probably monthly,” said consumer psychologist Adam Ferrier of Naked Communications.
ANZ borrowers can rest easy since the bank will probably kick off its out-of-cycle decision by leaving rates unchanged, such as its standard variable mortgage rate which now sits at 7.3 per cent a year.
While global credit markets remain wary of Europe's massive sovereign debt burdens, investor sentiment has started 2012 on a relatively positive note, helped in part by more promising economic figures from the US.
Still, investors continue to price in an interest rate cut by the RBA when it resumes its monthly rates decisions on February 7. Such a move would make it three rate cuts in as many meetings, and heap pressure on all the commercial banks to follow suit - including the ANZ.
The RBA lowered the cash rate twice in November and December - with all but the National Australia Bank among the major lenders to deliver the full 50 basis-point cut to customers.
Scrutiny
ANZ chief executive Mike Smith defended his bank's move to go it alone on interest rates by arguing that the RBA's actions only added to the mix of issues it faces in raising funds.
“The change in the RBA's official cash rate is one factor we assess when looking at funding costs,”he said in December.
“However, the price we pay for customer deposits, and for the domestic and international wholesale funding that we rely on in order to continue to lend, are much more important considerations.”
Matt Levey of consumer group Choice consumer group, though, said ANZ's breakaway decision is an attempt to remove itself from the glare of public and political scrutiny.
While the banks argue costs are not driven solely by the RBA, consumers should expect more transparency that would enable an objective reading on the costs faced by the industry, he said.
"In turn, we would expect to see when ANZ's cost of funds decline, their lending rates reduce by the same amount,” said Mr Levey.
The government's response to the global financial crisis - including supporting deposits - showed that to a degree Australia's banks have a tax-payer funded guarantee, he said. “So it's not as if there's no public interest in how those decisions are made.”
'Independent thinker'
Naked Communications' Adam Ferrier said the ANZ may cop a bit of flak in the short term over its solo rates-setting policy but it could ultimately work in favour of the bank's image.
“This will have a cumulative impact that will tell consumers they are not like the other big banks,” Mr Ferrier said.
“What matters is the long-term impact of this strategy,” he said, with a positive outcome likely to bolster ANZ's reputation as an “independent thinker”
That said, any goodwill the ANZ generates would evaporate the first time it opted not to follow the RBA down on rates.
“Obviously if they don't drop and the reserve does then consumers won't like it,” Mr Ferrier said.
czappone@fairfax.com.au
This reporter is on Twitter: @chrizap