ANZ Bank Passes on to Consumers Full Interest Rate Cut

ANZ Bank announced on Thursday that it will pass on to consumers the full 25 basis points interest rate cut made by the Reserve Bank of Australia (RBA) on Tuesday. It becomes the first of the four large Australian banks to cut its interest rate by 25 basis points, leaving the pressure on Commonwealth Bank, National Australia Bank and Westpac to follow suit.

ANZ said the rate cut would be applied on its standard variable and small business lending rates beginning Dec. 16. The bank would also offer a special two-year fixed term mortgage at 5.95 per cent.

"In the face of the economic and banking crisis in Europe, our decision on the size on the interest rate change has been one of the most difficult we have made in recent times," ANZ Australia Chief Executive Phil Chronican said in a statement.

"We know many people in the community are doing it tough at the moment and, on this occasion, we felt that a decision to reduce interest rates by 0.25 per cent (per annum) for home borrowers and for small business was the right one in the circumstances," he explained.

Treasurer Wayne Swan, who had earlier urged consumers to move their business to smaller banks and credit unions which had passed on to borrowers the rate cut in full, lauded ANZ for the move.

"The heat is now really on NAB, Westpac and CBA not to rip off their customers this Christmas," The Australian quoted Mr Swan.

"Australian families and small businesses are asking for nothing more than a fair go, at a time when bank profits are huge and family budgets are stretched," the treasurer added.

Mr Chronican added that ANZ will announce changes on variable interest rates for retail and small businesses on the second Friday of each month. He stressed that bank funding costs are now largely not linked to movements in the RBA's official cash rate.

"This provides a measure of predictability for customers on when rate changes will occur and it provides us with the flexibility to reflect movements in funding costs across the full spectrum of funding sources - not solely in response to the Reserve Banks cash rate," The Sydney Morning Herald quoted Mr Chronican.