All four of the big banks plan to pass on a central bank interest rate cut, but only one will deliver it in full, as the Reserve Bank calls for more infrastructure spending and job creation policies.
ANZ was widely criticised last month when it passed on just 0.18 percentage points of the Reserve Bank of Australia’s 0.25 percentage-point cut, so this time the bank is passing on the full amount.
Commonwealth Bank will pass on the RBA’s latest cut in full for its interest-only standard variable rate home loans, but will only cut principal and interest variable rate home loans by 0.19 percentage points.
Meanwhile, the NAB announced it would make a 0.18 percentage-point cut to its home loan interest rates.
The NAB and the CBA passed on June’s RBA rate cut in full.
Westpac will reduce most variable home loan rates, including those for owner-occupier mortgages, by 0.20 percentage points, although interest-only investors will get a reduction of 0.30 percentage points,
The bank made a similar move in June, with interest-only investors getting a reduction of 0.35 percentage points
The Reserve Bank’s two consecutive cuts, including another 0.25 percentage point drop on Tuesday, has lowered the key cash rate to a record low of one per cent.
Treasurer Josh Frydenberg expected the big banks to fall into line.
“The government expects all banks to pass on the benefits of sustained reductions in funding costs,” he said in a statement on Tuesday.
Reserve Bank Governor Philip Lowe gave a speech in Darwin on Tuesday night where he said easing monetary policy wasn’t the only way to push the economy forward.
“One option is fiscal support, including through spending on infrastructure,” he said.
“Another option is structural policies that support firms expanding, investing, innovating and employing people. A strong, dynamic, competitive business sector generates jobs.”
Labor leader Anthony Albanese said the rate cut was a “cry for help” from the Reserve Bank.
Labor wants the federal government’s planned 2022 change to the 32.5 per cent tax threshold – from $90,000 a year to $120,000 – brought forward, while also putting off further changes planned for 2024.
“If that’s good policy in 2022, let me tell you, today’s decision by the Reserve Bank screams that that’s good policy in 2019,” Mr Albanese told Sky News.