ANZ joins NAB in interest rate cut promise

ANZ has followed NAB's lead and promised to lower mortgage rates if the Reserve Bank cuts official rates.

ANZ joins NAB in interest rate cut promise

ANZ has pledged to lower home loan rates if the Reserve Bank decides to cut official interest rates at its next board meeting.

The pledge comes a day after rival National Australia Bank promised to match a 25 basis point cut to interest rates if the RBA eases monetary policy by that amount at its September 2 board meeting.

"It's unusual to be asked what we are going to do ahead of a rate cut but on what we know today, this is a pretty simple equation,'' ANZ chief executive Mike Smith said.

"If funding costs continue at the current levels and the Reserve Bank do actually cut rates, then there will be a full flow on to our mortgage customers.''

The RBA has hinted strongly that it will move to ease monetary policy and economic pundits are tipping the cut could be as soon as next month.

Expectations differ as to whether it will be by 25 basis points or 50 basis points.

Unlike NAB yesterday, ANZ's pledge is not tied to just a 25 basis point reduction, potentially exposing the bank to passing on a higher cut from the central bank.

The other major banks, Westpac and Commonwealth Bank of Australia, have so far refused to guarantee they will pass in full any cut to the official 7.25 per cent cash rate.

Yesterday, Federal Treasurer Wayne Swan said there was a public expectation that the banks would follow the RBA.

"They follow them when they go up; they should follow them when they go down,'' he said.

"I expect the major banks to pass on rate cuts if and when the Reserve Bank takes that decision.''

The pledge by ANZ follows the release earlier today of a damning report into its involvement with failed securities lender Opes Prime.