The main financial lenders in Australia are not passing on yesterday’s RBA interest rate cut in full, possibly slowing the central bank’s attempts to stimulate the economy.
The country’s biggest bank for example, the Commonwealth Bank, will pass on just half of the 0.25 percentage point cut to its mortgage holders, and the NAB will be passing on just 0.1 of a percentage point.
Yesterday the RBA governor Glenn Stevens said it was low inflation and the stubborn, upward-moving Australian dollar that gave them to scope to cut the official cash rate again.
Interest rates in Australia have again hit a new record low at 1.5 per cent and it’s a similar story around the world, with countries such as the USA, Japan, and Britain and many in the European Union all having even lower interest rates than Australia.
In a surprise move, some banks not only refused to pass the rate cut on in full but also lifted their rates on deposits.
Treasurer Scott Morrison said commercial banks had taken a package approach to their response to the RBA rate cut.
“It’s not often when you get a cut in the cash rate that depositors get a bit of good news,” he said.
“It’s usually the opposite.”
Prime Minister Malcolm Turnbull has said today he expects banks to pass the rate cut on the customers in full or explain openly why they are not doing so.