It used to be the case that on average banks paid about 125 basis points less than the cash rate on deposits. Now they are paying interest rates that are on average in line with the cash rate (Graph 3).
9 This reasoning is based on a variety of potential channels: an increased degree of openness reduces the responsiveness of inflation to domestic slack, profit margins become more variable under competitive pressure and wage developments that are influenced by the threat of outsourcing jobs and labour immigration.