4 Aussie Banks Pass in Full 25 Basis Points RBA Rate Cut
In a big turnaround from their previous decision, four of the biggest Australian banks said on Tuesday that they will pass in full the 25 basis points overnight cash rate made by the Reserve Bank of Australia (RBA) on the same day.
Hours after the RBA cut the benchmark lending rate to all-time low of 2.75 per cent in a bid to boost the Australian economy, the National Australia Bank announced that it would cut its standard variable rate to 6.13 per cent. The rate cut takes effect on May 13, Monday.
The Commonwealth Bank of Australia followed and said it would reduce on the same day its variable rate to 6.15 per cent while Westpac will cut its rate to 6.26 per cent and St George to 6.24 per cent.
ANZ is scheduled to hold its monthly rate review on Friday and would likely follow the four banks.
Smaller lenders also passed in full the RBA rate cut, such as the Bank of Queensland, Suncorp Bank and ING Direct.
The move is seen as the banks' way of remaining competitive.
"We recognise that certainty is important for our customers, which is why we are pleased to be able to quickly pass on a 25 basis point reduction," NAB personal banking executive Gavin Slater said in a statement.
"The Commonwealth Bank believes that this is a balanced decision taking into account both domestic and offshore factors," CBA executive of retail banking services Matt Comyn said in a separate statement.
With the rate cut, a family with a $300,000 mortgage is expected to pay $5,500 less annually compared to 2007 when Australia was led by the Howard government.
Treasurer Wayne Swan expressed satisfaction that four major Australian banks decided this time to follow the RBA lead and would pass in full the key lending rate cut. However, he debunked suggestions the rate cuts were made to reflect the poor performance of the Australian economy.
"We have solid growth, we have low unemployment, we have a strong investment pipeline, we have strong public finances, we have contained inflation and we gave low interest rates," he emphasised.
He said the record-low rates are possible because of the responsible fiscal policy put in place by the Labor-led government the past five and a half to six years.
