BIG FOUR BANKS TO PASS ON RATE CUT
All four big banks to pass on cut
BOWING to pressure from the Federal Government, the “big four” banks have announced they will each pass on the Reserve Bank’s rate cut in full, saving borrowers hundreds of dollars a month.
Westpac was the first out the door to hand the
0.25 per cent rate cut over to customers yesterday, followed closely by Commonwealth Bank, NAB and then ANZ.
The 0.25 per cent reduction in rates means an owner-occupier with a standard variable home loan of $400,000 will save an extra $60 per month, or $720 per year, Westpac said.
Prime Minister Scott Morrison had earlier said he expected the banks to “do the right thing” by consumers and pass on the expected rate cut in full as the coronavirus weighs on the economy.
The RBA delivered the goods, easing to a new record low 0.5 per cent from 0.75 per cent yesterday in an effort to prop up the economy amid a coronavirus threat.
THE Reserve Bank of Australia has cut the cash rate to a record low of 0.5 per cent as it moves to buttress the economy against a worse-than-expected hit from the coronavirus.
Pricing for the 25 basis point rate cut had advanced from an outside chance last week to a foregone conclusion by yesterday morning, following a torrid weekend for a virus-rattled economy.
In his address following the March board meeting, RBA governor Philip Lowe said earlier forecasts that the economy had reached a “gentle turning point” were now under a cloud.
GDP growth in the March quarter is likely to be “noticeably weaker” than earlier expected.
“Prior to the outbreak, there were signs that the slowdown in the global economy that started in 2018 was coming to an end,” Dr Lowe said in his address after the bank’s March board meeting.
“It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path.”
Dr Lowe said the virus was expected to delay progress towards the RBA’s target for full employment and inflation.
He said the RBA board remained prepared to ease monetary policy further.
The market is predicting the next move, to 0.25 per cent, by June, at which point policymakers would launch quantitative easing measures.
“Once the coronavirus is contained, the Australian economy is expected to return to an improving trend,” Dr Lowe said.
The “big four” banks have announced they will each pass on the Reserve Bank’s rate cut in full, saving borrowers hundreds of dollars a year.
Westpac was the first out the door to hand the 0.25 per cent rate cut over to customers, followed closely by Commonwealth Bank, NAB and then ANZ.
The 0.25 per cent reduction in rates on means an owneroccupier with a standard variable home loan of $400,000 will save an extra $60 per month, or $720 per year, Westpac said.
Prime Minister Scott Morrison had earlier announced he expected the marginpressured banks to “do the right thing” and pass on the expected rate cut in full.
Australia’s interest rate had already been lowered three times to 0.75 per cent last year in a bid to kickstart an economy that was sluggish even before the summer’s bushfires and coronavirus threat came into play.
APAC economist Callam Pickering said further stimulus would be necessary to help the economy meet its unemployment and inflation goals within the next two years.
“The Reserve Bank no doubt recognises that cutting today won’t help the economy a great deal, at least not in the short-term,” Mr Pickering said.
“But the economic circumstances, both short and medium-term, warrant greater support.”