Rudd asks banks to take cue from RBA rate cut

08 April 2009

Prime minister Kevin Rudd has urged two major banks to reconsider their response to the latest interest rate cut by the Reserve Bank of Australia (RBA), which slashed official rate to3 per cent.

Belying analysts' expectations, RBA cut interest rates by a quarter of a percentage point to its lowest level since March 1960, resuming the most aggressive easing cycle on record.

However, the National Australia Bank (NAB) has refused to follow RBA's footsteps and said will not adjust its home loan rates.

Australia's biggest mortgage lender, the Commonwealth Bank of Australia (CBA) said it will pass on 10 basis points of the RBA cut to the customers as the cost of wholesale funding remains ''extremely high''.

Rudd expressed his disappointment, saying that the banks have generally acted responsibly since the RBA started cutting rates last year.

"The bulk of that has been passed through and in the case of the Commonwealth Bank I think of the 425 basis point cut they have probably passed on all but 20 or 30 basis points of that," he said.