Big banks tipped to pocket half of RBA rate cuts

The big banks are likely to pocket up to half the benefit of any Reserve Bank cut in the official interest rate next week, analysts say.

AMP Capital Investors chief economist Shane Oliver said that if the Reserve Bank cut the cash rate by 25 basis points, the banks were likely to reduce lending rates by only between 10 and 15 basis points.

If the RBA cuts by 50 basis points, banks were likely then to cut mortgage and business lending rates by 35 basis points, he said.

Barclays Capital chief interest-rate strategist Gavin Stacey also said there was a strong chance banks would not pass on any cut in the cash rate to customers.

Source: Herald Sun