- The Reserve Bank of Australia has announced it will cut official interest rates by 25 basis points to a new record low of 1.25%
- The Commonwealth Bank and National Australia Bank will both reduce interest rates on standard variable rate home loans by 0.25%. ANZ and Westpac have announced reduction of 0.18% and 0.20% respectively.
- Treasurer Josh Frydenberg called on the banks to pass on the cuts in full.
Australia’s central bank on Tuesday cut official interest rates by 25 basis points, leaving the cash rate at a new record low of 1.25%.
In response, two of Australia’s big four banks – the Commonwealth Bank and the National Australia Bank — have announced they will pass on the rate cut of 0.25% in full for all variable home loans.
A statement from NAB chief customer officer and former NSW premier Mike Baird said it will be NAB’s lowest standard variable rate in 40 years.
“We strongly believe reducing rates is the right thing to do by our customers and reflects our focus on earning trust in the community and rewarding our loyal existing customers,” he said.
But ANZ and Westpac have bucked the trend, announcing rate cut of just 0.18% and 0.20% respectively despite the announcements made by its two competitors.
“In making this decision we have weighed up a number of factors, such as business performance, market conditions and the impact on our customers, including our depositors,” said ANZ’s group executive of Australian retail and commercial Mark Hand in a statement on the bank’s website.
“While we recognise some home loan customers will be disappointed, in making this decision we have needed to balance the increased cost in managing our business with our desire to provide customers with the most competitive lending and deposit rates possible.”
At the time of writing, Westpac had not issued any public response to the RBA decision.
The announcements follow Federal Treasurer Josh Frydenberg reportedly meeting with bank top brass to push them to pass on any official interest rate reduction to consumers.
“I expect all banks to pass on the benefits of sustained reductions in funding costs,” Frydenberg said on Tuesday, according to The Sydney Morning Herald.
UPDATED 8.22pm 4/6/19: This article was updated to include Westpac’s response to the RBA decision, which had not been released at the original time of publication.
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