Two of the big four banks will no doubt come under fire after revealing overnight they won't pass on the Reserve Bank of Australia's interest rate cut in full.
The RBA on Tuesday announced it would cut the cash rate to 0.75 per cent, reducing the cost of borrowing for the third time in five months.
The Commonwealth Bank responded by revealing it would keep nearly half of the official 0.25 per cent cut, while NAB said it would pass on a meagre 0.15 per cent to customers.
ANZ and Westpac are yet to respond to the RBA's announcement.
Treasurer Josh Frydenberg was scathing in his assessment of the response of CBA and NAB, saying the banks had refused to 'do the right thing'.
On Tuesday evening, the Commonwealth Bank responded to RBA's rate cut by announcing it would reduce its standard variable rate for home loan customers by between 0.13 and 0.25 per cent (stock image)
'It's disappointing that the CBA and NAB have not done the right thing by their customers and passed on the full rate cut,' he told The Daily Telegraph, adding the banks would now need to explain to customers 'why they won’t get the full benefit'.
On Tuesday evening, the CBA said it would reduce its standard variable rate for home loan customers by 0.13 per cent.
In a statement, CBA said as the RBA cash rate reached record lows it faced a 'difficult balancing act' between the multiple interests of its stakeholders.
'Particularly given it is currently not feasible to pass on the full rate reduction to more than $160 billion of our deposits which are at, or near, zero rates,' Retail Banking Services group executive Angus Sullivan said.
'In balancing these interests, we have carefully considered how to best meet the needs of over 6 million savings customers with the needs of our 1.6 million home loan customers, who want to pay less on their mortgages.
'And the needs of our shareholders, many of whom are retirees who rely on our dividend.'
The new standard variable rate for home loans will take effect on October 22.
NAB followed suit on Tuesday evening, announcing it would lower rates by 0.15 effective October 11.
The RBA on Tuesday announced it would cut the cash rate to 0.75 per cent, reducing the cost of borrowing for the third time in five months (stock image)
Mike Baird, NAB's Chief Customer Officer Consumer Banking, said the bank, like all major lenders, largely relied on customer deposits in order to lend.
'With the RBA cash rate at historic lows, the cost of