The Australia-New Zealand Banking Group (ANZ) has indicated on Friday its plan to shatter the 'nexus' that exists between banks' mortgage rates and the country's policy rates, as dictated by the Reserve Bank of Australia (RBA).

ANZ chief executive Philip Chronican described the system as nothing but dysfunctional as he reminded that banking operations also entail a host of other cost concerns apart from the cash rate, a variable that is mostly not controlled by banks.

"There's a fairly tenuous link between the Reserve Bank cash rate and the cost of funds of a variable rate mortgage, and yet we're all stuck in the same routine of waiting for an RBA cash rate move before we move," Chronican was reported by Business Day as saying on Friday.

Despite ANZ's declaration, the bank toed the line and said it will implement the rate reduction of 25 basis point imposed by the central bank this week, following the same decision earlier announced by Commonwealth Bank, National Australia Bank and Westpac.

Together, all banks were lumped together by industry experts as the Big Four and largely seen as the prominent policy movers in the Australian banking environment.

However, ANZ also clarified that its internal rate movement will now be determined by its own review schedule, set by bank officials to occur every second Friday of the month, and independent from the RBA rate policy.

Industry analysts interpreted the new ANZ move as detrimental to the interest of its customers, who they said will have to possibly deal with ANZ's changing interest rate regardless if the RBA leaves the country's rate unchanged.

"We've all said it's wrong, we've all said it's a nexus that needs to be broken and we just thought it was about time somebody did something about it," Chronican said in explaining ANZ's decision.

He added that banks' mortgage rates is but one of the whole lot of components that impact the domestic economy and its movement should not merit too much attention from the federal government, so long as they are reasonable.

Chronican added that so far pressures were being felt by ANZ coming from the federal government that would influence its internal policy.

If any, it would be in the form of appreciation issued on Thursday by Federal Treasurer Wayne, lauding the banks for providing relief to the Australian public.

"'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," Swan said in praising the rate cuts observed by the major banks, including ANZ.