The Reserve Bank of Australia on Tuesday cut the official cash rate to 1.75 percent in a bid to address falling prices and an economic downturn.
The Australian Bureau of Statistics on Wednesday published a report on deflation in the Australian economy. The consumer price index (CPI) contracted 0.2 percent in the three months to the end of March, taking the annual rate to 1.3 percent, compared with 1.7 percent at the end of December. This is below the target inflation rate which the RBA is mandated. The RBA would like to keep inflation by 2 to 3 %.
NAB, CBA, and Westpac have already passed on the full rate cut to their home loan customers. ANZ is the only bank not passing on the full rate cut. Instead, ANZ Bank will reduce its home loan rates by 0.19 of a percentage point.
If the 25 basis point cut was fully passed on to home loans by the banks, it would equate to a $43-a-month saving on a typical 25-year $300,000 mortgage.