RBA interest rate cuts: Treasurer implores Australians to ‘vote with their feet’

The official rate has fallen below 1 per cent for the first time in history but the big banks aren’t being as generous with rate cuts.

Treasurer Josh Frydenberg has lashed out at the major banks for rejecting calls to pass on the interest rate cut in full.

He has implored Australians to ditch their lenders as two of the big four passed on only part of the reduction and two remained silent this morning, gouging Australians millions of dollars.

Both Commonwealth Bank and NAB passed on half of the 25-basis-point fall, while Westpac and ANZ are yet to announce their position after the Reserve Bank cut rates below 1 per cent for the first time in history yesterday, tumbling to a record 0.75 per cent.

Many of the smaller lenders have enacted the full reduction, however, including Athena, Homestar, Auswide, and UBank.

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“The banks have a lot of explaining to do because this is very disappointing,” Mr Frydenberg told Channel 9 today.

“Customers should vote with their feet.”

Opposition Leader Anthony Albanese joined the chorus and demanded action.

“The banks need to pass on the interest rate cut in full and the government needs to do something about it,” he told reporters in Queensland. “They can’t just sit back as spectators while this occurs.”

The Australian Chamber of Commerce and Industry urged the banks to pass on the rate cut in full to lift spending on retail.

“Small businesses have been doing it tough over the past year. This has particularly affected discretionary spending in small retail businesses, including cafes and restaurants,” chief executive James Pearson said.

Yesterday was the third time RBA governor Philip Lowe slashed the official rate since June but he predicted further cuts over the coming months.

“The board took the decision to lower interest rates further today to support employment and income growth and to provide greater confidence that inflation will be consistent with the medium-term target.” he said.

“It is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target.”

RBA governor Philip Lowe cut rates again yesterday. Picture: David Moir/Bloomberg

BIS Oxford Economics chief economist Dr Sarah Hunter said the commentary related to inflation and the RBA’s expectation it would remain about 2 per cent for another two years, “suggests there will not be a rate rise until the end of 2021 at the earliest”.

AMP chief economist said he expected another 25-basis-point cut in November and then again in February.

CBA executive Angus Sullivan said yesterday rates were now at all-time lows, but Australia’s biggest bank wouldn’t be following suit with its cut.

“As the RBA cash rate has reached record lows, we face a difficult balancing act between the multiple, valid interests of our stakeholders,” he said.

“Particularly given it is currently not feasible to pass on the full rate reduction to more than $160 billion of our deposits which are at, or near, zero rates.

“In balancing these interests, we have carefully considered how to best meet the needs of over six million savings customers — who may find it challenging to make ends meet with record low savings interest rates — with the needs of our 1.6 million home loan customers, who want to pay less on their mortgages; and the needs of our shareholders, many of whom are retirees who rely on our dividend.”

— with AAP

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