UPDATE @ 4.00PM: ANZ has become the first bank to move on interest rates, confirming it will pass on the full 0.25% rate cut to home loan customers.
The bank came in for heavy criticism last month when it failed to pass on the full cut.
“Today we have decided we will reduce variable interest rates for our home loan customers by 0.25%pa, ANZ Group Executive, Australia Retail & Commercial, Mark Hand said.
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“Importantly, we will apply this reduction across all our variable rate home loans.
“We looked at a number of factors before reaching this decision, including business performance, market conditions and the impact on our customers.
“On balance, we believe this is the right decision for our home loan customers and for our business.”
EARLIER @ 2.30PM: The Reserve Bank has cut interest rates for the second month in a row as it tries to stimulate the Australian economy.
It’s the first time since 2012 that the RBA has delivered back-to-back cuts with the official cash rate now at a historic low of 1 per cent.
The move should save those on an average mortgage of $400,000 around $60 a month.
In a statement, RBA Governor Philip Lowe said “this easing of monetary policy will support employment growth and provide greater confidence that inflation will be consistent with the medium-term target.”
The RBA says while employment growth remains strong, inflation remains subdued.
However it expects inflation to pick up in the June quarter on the back of higher petrol prices.
“Today’s decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target.”
All eyes now are on the banks to see if they pass the rate cut onto customers in full.
ANZ and Westpac came in for heavy criticism last month after only passing on part of the rate cut.