Banks Should Pass Cut to Consumers

The latest 0.25 point rate cut should be passed on to its customers. This was the plea of Prime Minister Julia Gillard, Treasurer Wayne Swan and shadow treasurer Joe Hockey.

Hockey went even further, saying that if banks do not pass on the rate cut to their customers, they should explain why not.

Calculations of the Reserve Bank of Australia showed that the country’s largest banks are in a good position to pass on the latest rate cut to their customers. In fact, they are in a much better position now compared to last October’s rate cut.

In October, ANZ, National Australia Bank and Commonwealth passed on about 0.20 points of their 0.25 point cut. Westpac, meanwhile, passed on 0.18 points.

RBA governor Glenn Stevens said the big four banks should have no problem accessing funding. Prime Minister Julia Gillard said that Australian families would expect banks to pass them the rate cut in full especially now that Christmas is fast approaching.

Treasurer Wayne Swan said that ING Direct has done it and other banks should follow suit.

If banks passed on the rate cut, this means families would enjoy a $47 reduction from the monthly cost of providing services to a $300,000 mortgage.

Rate cuts are implemented because signs point that business investments may be weakening.