Published: Sun, June 09, 2019
Markets | By Otis Pena

Treasurer Josh Frydenberg’s warning to Australian banks ahead of cash rate cut

Treasurer Josh Frydenberg’s warning to Australian banks ahead of cash rate cut

David Lindberg, Westpac's chief executive of consumer, meanwhile, said that the historically low interest-rate environment creates the opportunity for homeowners to get ahead on their repayments.

"ANZ's decision to not pass on today's cut in full is a huge disappointment and now all eyes will on the remaining big banks to see if they can go one better", Ms Tindall said.

ANZ was first major to respond in a move similar to that by big banks following the previous RBA cut in August 2016, when they reduced variable rates by an average 0.13 percentage points and pocketed the rest.

NAB analysts said the chances of a further 25 basis point cut in July or August would be complicated by datasets potentially skewed by the federal election campaign in May.

"While we recognise some home loan customers will be disappointed, in making this decision we have needed to balance the increased cost in managing our business with our desire to provide customers with competitive lending and deposit rates", he said.

"It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target".

"Low inflation does not occur by accident ..."

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"And with global conditions deteriorating markedly and the USA heading for a sharper than anticipated slowdown ... we think it's likely that (the RBA) will cut for a third time this year in November", she said.

In contrast, Athena, RACQ and Reduce Home Loans have announced they'll be passing on the full 0.25 per cent cut.

"My message to the banks is that, while they are critical pillars of the economy and especially at a time of domestic and global economic challenges, it was important to maintain the flow of credit to households and businesses", Frydenberg told The Australian on Tuesday.

"The Board will continue to monitor developments in the labour market closely and adjust monetary policy to support sustainable growth in the economy and the achievement of the inflation target over time".

He told reporters in Brisbane, "If only this government spent less time bagging Labor or pointing the finger at others and more time focused on the substantial weaknesses in the economy it wouldn't be floundering as badly as it is today".

Despite the pressure on banks to pass on any RBA cut in full, some experts are sceptical that they will.

The property industry was quick to welcome the rate cut.

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