Amid the profit announcements, job cuts and interest rate moves, the national debate over banking has this month grown more hysterical than usual. One example: the growing claims that the banks have decided they will no longer be bound by official interest rate policy.One morning last week, ABC Radio's Melbourne morning show presenter, Jon Faine, spent several minutes verballing the industry's chief spokesman, Australian Bankers Association CEO Steven Münchenberg. Faine at his best can be a fine interviewer. But on this morning he had unaccountably decided that by adjusting rates without a Reserve Bank announcement, the banks were rendering government and Reserve Bank policy impotent. He told his listeners that the banks were saying: "we will decide what's best for the Australian economy; we won't let the Reserve Bank decide what's best for the Australian economy". He added, in a tone that suggested he knew exactly what he was talking about: "It nobbles the government's main strategy for trying to in some ways address inflation and therefore control what goes on in parts of Australia"s economic activity.".If Faine were right, this would be a huge problem for macroeconomic management in Australia. Thankfully, it's populist blather based on inadequate research and poor understanding. If Faine really believes it, he need only wait until the Reserve does move rates. That will amply demonstrate that the banks are still tied tightly to official monetary settings.The not-very-complicated truth is, of course, that the banks' pricing is influenced by more than one thing, just like prices in most business. Banks are now moving rates up because they are paying noticeably more for money, in a global market which is nervous about who it lends to. The rises are hardly enormous: ANZ's much-criticised mortgage rate increase amounted to six basis points.But if the Reserve wants to nullify the effect of such a rise, it needs only to make an offsetting change of a few basis points when next it moves rates.Reserve assistant governor Guy Debelle confirmed this analysis in comments after his speech to a Bloomberg financial markets seminar this week. He noted that to the extent the banks' mortgage rates react to factors other than "official" rate changes, the Reserve's management gets slightly less precise. But he also made the point that mortgage rates are just one of many transmission mechanisms for monetary policy, and there's always been imprecision in the process. Debelle also noted Australia's great advantage over the US, where most mortgages run 30 years and are immune to short-term official rate moves.So have the Australian banks' recent changes to their processes influenced the effect of monetary policy? "I don't think that has changed materially at all," Debelle said.Münchenberg made this very point to Faine in his interview. Faine simply ignored it. Right now, ranting against the banks is too popular an activity to be restrained by mere reason.