Australia's big banks are being urged to explain why they can't pass on any future interest rate cuts in full to customers.
The RBA is widely tipped to slash the official cash rate by as much as 50 basis points tomorrow, but home buyers are only expected to receive a portion of the rate cut.
The Rudd government is not putting pressure on the banks to pass on the full rate reduction, because it says lenders are facing higher borrowing costs as a result of the global financial crisis.
But Shadow Treasurer Julie Bishop has told the ABC the banks must provide details about why they can’t afford to pass on an interest rate cut in full.
“[They must explain] how it would affect their record profitability and how it would affect their operations,” she said.
But CommSec economist Sevanth Sebastian says mortage holders can only expect to see some relief if the RBA takes dramatic action.
“We expect at least 25 basis points worth of rate cuts,” he told LIVENEWS.com.au.
“But you may see the Reserve Bank - if they want the banks to pass on a substantial rate cut – to cut rates by up to 50 basis points.”
