Big banks set to hold onto rate cuts
The Reserve Bank could be forced to cut interest rates again if the major Australian banks don't pass on yesterday's cut in full. The top four banks last night still had not moved their standard variable lending rates in response to the RBA's 25 basis-point cut in the official cash rate from 4.5 per cent to 4.25 per cent yesterday.
Even holding back 10 basis points of a 25 basis-point cut would save the four big banks between $300 million to $400 million, according to analysts. Wayne Swan warned the banks yesterday there was no reason not to pass on the benefits to customers, even though banks' funding costs had been increasing.
“I understand that many families and small businesses will be very angry if there is not a full pass through of this rate cut by the banks in the system,” the Treasurer said.
“I certainly believed then (November) and I believe now that there was no justification. I believe that banks should pass this rate cut through in full.”
Source: The Australian