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You can find the current article at its original source at https://www.theguardian.com/australia-news/live/2019/jun/04/reserve-bank-interest-rates-rba-board-meets-to-decide-on-borrowing-costs-live
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| Reserve Bank interest rates: RBA cuts rates to historic low of 1.25% – live | Reserve Bank interest rates: RBA cuts rates to historic low of 1.25% – live |
| (30 minutes later) | |
| NAB has also cut is rate by 0.25% | |
| That’s about it for the blog. Thanks for reading on this momentous afternoon. Mortgage holders will be grateful for the extra bucks but savers will be counting the cost. | |
| These are the main points: | |
| The RBA, as widely expected, has cut the cash rate from 1.5% to a fresh historic low of 1.25%. | |
| The RBA governor Philip Lowe said the move would help reduce unemployment and boost inflation back towards its 2-3% target range. | |
| He remains optimistic about the Australian economy, seeing 2.75% growth this year and next, despite some headwinds from the US-China trade dispute. | |
| ANZ was the first big bank to cut its lending rate, knocking off 0.18%. CBA has passed on the full 0.25%. | |
| Treasurer Josh Frydenberg welcomed the RBA cut but said ANZ had “let down” its customers and that the bank’s decision was “deeply disappointing”. | |
| The Aussie dollar stayed pretty flat after the RBA announcement, settling at US69.76c at 4pm. | |
| The ASX200 closed at up 15 points, or 0.25%, at 6336. | |
| Many economists expect the RBA to cut rates at least one more time this year. Capital Economics thinks the rate could hit 0.75%. | |
| Philip Lowe will make a speech in Sydney tonight which might shed more light on how he sees rates panning out. | |
| Our economics expert Greg Jericho has been looking at the RBA decision and concludes that the government should feel “great shame” at such a low lending rate. | |
| Even during the global financial crisis the cash rate stayed generally 1% above the inflation rate. Having to cut it so low during a period when the economy is growing (albeit slowly) and unemployment is just above 5% is a pretty sad indictment of how the economy has been handled. | |
| Read his whole piece here: | |
| The government should feel great shame at this astonishingly low interest rate | Greg Jericho | |
| This is interesting. The money-saving site mozo.com.au has done a very quick calculation about how the ANZ will be saving by only cutting its standard rate by 0.18% rather than the full 0.25%. They’ve also looked at how much it saves by delaying implementation of the cut for nine days. | This is interesting. The money-saving site mozo.com.au has done a very quick calculation about how the ANZ will be saving by only cutting its standard rate by 0.18% rather than the full 0.25%. They’ve also looked at how much it saves by delaying implementation of the cut for nine days. |
| Using Apra’s monthly banking stats on the big four banks’ loan book values, Tom Godfrey of Mozo says: | |
| By delaying their partial cut by nine days ANZ is banking $13.4m. Also, by holding back 7 basis point ANZ is set to rake in $152.5m over the year. | By delaying their partial cut by nine days ANZ is banking $13.4m. Also, by holding back 7 basis point ANZ is set to rake in $152.5m over the year. |
| Welcoming the CBA’s move to give the whole 0.25%, Tom nevertheless points out it is saving a fair bit by delaying the cut: | Welcoming the CBA’s move to give the whole 0.25%, Tom nevertheless points out it is saving a fair bit by delaying the cut: |
| It’s encouraging that CBA is passing on the full 25 basis point cut but by delaying the date it takes effective until June 25, CBA is banking $50m. | It’s encouraging that CBA is passing on the full 25 basis point cut but by delaying the date it takes effective until June 25, CBA is banking $50m. |
| In a statement the CBA said its move meets “community expectations” ie what the public wants. | In a statement the CBA said its move meets “community expectations” ie what the public wants. |
| Angus Sullivan, the retail banking boss, says: | Angus Sullivan, the retail banking boss, says: |
| We have carefully considered the RBA rate decision and the current funding environment, together with how we continue to meet our regulatory commitments, capital requirements, and community expectations. | We have carefully considered the RBA rate decision and the current funding environment, together with how we continue to meet our regulatory commitments, capital requirements, and community expectations. |
| Here’s the statement in full. | Here’s the statement in full. |
| The Commonwealth has passed the rate cut on in full to its customers. | The Commonwealth has passed the rate cut on in full to its customers. |
| Following the Reserve Bank’s cash rate decision, we will reduce all of our Standard Variable Rate home loans by 0.25% p.a. | Following the Reserve Bank’s cash rate decision, we will reduce all of our Standard Variable Rate home loans by 0.25% p.a. |
| Some more reaction to this afternoon’s events. Labour’s Andrew Leigh raises the “mismanagement” issue. (Surely a blunder that they failed to make more of that in the election campaign): | Some more reaction to this afternoon’s events. Labour’s Andrew Leigh raises the “mismanagement” issue. (Surely a blunder that they failed to make more of that in the election campaign): |
| When the RBA cut rates to 1.5% in August 2016, it was described as “emergency level”. Cutting to 1.25% means the lights and sirens are getting louder. The Liberals have mismanaged the economy. #ausecon #auspol | When the RBA cut rates to 1.5% in August 2016, it was described as “emergency level”. Cutting to 1.25% means the lights and sirens are getting louder. The Liberals have mismanaged the economy. #ausecon #auspol |
| If depositors en-masse actually got off their asses and started seriously shopping around for better interest rates from banks, you will find that they will drive the banks to be more competitive. Until then, you're gonna receive a lower rate than you likely should be. | If depositors en-masse actually got off their asses and started seriously shopping around for better interest rates from banks, you will find that they will drive the banks to be more competitive. Until then, you're gonna receive a lower rate than you likely should be. |
| The RBA has lowered rates to a fresh record low of 1.25%, but offered few clues as to whether it will move again in the next few months. RBA governor Philip Lowe may offer more hints in a speech and Q&A session tonight at 7:30pm https://t.co/TBjRWkZ7Yr #ratecut #ausecon | The RBA has lowered rates to a fresh record low of 1.25%, but offered few clues as to whether it will move again in the next few months. RBA governor Philip Lowe may offer more hints in a speech and Q&A session tonight at 7:30pm https://t.co/TBjRWkZ7Yr #ratecut #ausecon |
| The ANZ move is a big talking point. The team at RateCity point out that the small lenders Athena, RACQ and Reduce Home Loans have all passed on the cut in full. | The ANZ move is a big talking point. The team at RateCity point out that the small lenders Athena, RACQ and Reduce Home Loans have all passed on the cut in full. |
| Sally Tindall, research director at RateCity.com.au, said all lenders needed to step up and pass on the cut in full. | Sally Tindall, research director at RateCity.com.au, said all lenders needed to step up and pass on the cut in full. |
| ANZ’s decision to not pass on today’s cut in full is a huge disappointment and now all eyes will on the remaining Big Banks to see if they can go one better. Reduce, RACQ and Athena were the first out of the starting blocks. This now puts immediate pressure on other lenders to pass the full cut on to both their new and existing customers. | ANZ’s decision to not pass on today’s cut in full is a huge disappointment and now all eyes will on the remaining Big Banks to see if they can go one better. Reduce, RACQ and Athena were the first out of the starting blocks. This now puts immediate pressure on other lenders to pass the full cut on to both their new and existing customers. |
| He’s also asked if the RBA cut is a sign that the economy is in trouble. After all, rates are basically at an emergency level never seen before, and have been for some years now. | He’s also asked if the RBA cut is a sign that the economy is in trouble. After all, rates are basically at an emergency level never seen before, and have been for some years now. |
| He dead-bats the question, saying the “fundamentals are sound”. Unconvincingly, he points to Philip Lowe’s statement as proof. The governor says the economy will grow by 2.75%, so it will, OK? | He dead-bats the question, saying the “fundamentals are sound”. Unconvincingly, he points to Philip Lowe’s statement as proof. The governor says the economy will grow by 2.75%, so it will, OK? |
| You have heard from the Reserve Bank Governor today. He said employment growth has been strong and the central scenario remains for the Australian economy to grow by around 2.75% for 2019 and 2020. That was the comment from the Reserve Bank Governor today in his statement. | You have heard from the Reserve Bank Governor today. He said employment growth has been strong and the central scenario remains for the Australian economy to grow by around 2.75% for 2019 and 2020. That was the comment from the Reserve Bank Governor today in his statement. |
| Frydenberg’s press conference is continuing. | Frydenberg’s press conference is continuing. |
| He has been asked if he thinks the bank’s own borrowing costs have been reduced by this cut. Banks have sometimes claimed that their costs are not reduced by such cuts and therefore can’t afford to pass them on to customers. | He has been asked if he thinks the bank’s own borrowing costs have been reduced by this cut. Banks have sometimes claimed that their costs are not reduced by such cuts and therefore can’t afford to pass them on to customers. |
| Frydenberg says that he thinks their costs have come down: | Frydenberg says that he thinks their costs have come down: |
| In my conversations with the bank CEOs and chairman they have made it clear that some of their funding costs have come down. So this is a 25-basis-point reduction. It is the first movement in around three years and so in that sense it is significant but we would expect that the Australian people would see the benefit of these reductions in rates and the decision by the RBA and I’m very disappointed in the decision by the ANZ today. | In my conversations with the bank CEOs and chairman they have made it clear that some of their funding costs have come down. So this is a 25-basis-point reduction. It is the first movement in around three years and so in that sense it is significant but we would expect that the Australian people would see the benefit of these reductions in rates and the decision by the RBA and I’m very disappointed in the decision by the ANZ today. |
| The treasurer is quizzed about the ANZ cut, specifically what he thinks of the bank’s decision not to pass the cut on in full. | The treasurer is quizzed about the ANZ cut, specifically what he thinks of the bank’s decision not to pass the cut on in full. |
| He says ANZ has “let down” its customers. | He says ANZ has “let down” its customers. |
| I think the ANZ has let down itscustomers. This is deeply disappointing from the ANZ. We heard from commissioner Hayne just months ago that the banks were putting profits before people. Actions like this don’t give the Australian people any comfort that the banks have changed their behaviour. And as treasurer of Australia I have made it very clear to the banks that the public have a legitimate expectation that they will see the full benefits of rate cuts such as announced by the RBA today. | I think the ANZ has let down itscustomers. This is deeply disappointing from the ANZ. We heard from commissioner Hayne just months ago that the banks were putting profits before people. Actions like this don’t give the Australian people any comfort that the banks have changed their behaviour. And as treasurer of Australia I have made it very clear to the banks that the public have a legitimate expectation that they will see the full benefits of rate cuts such as announced by the RBA today. |
| The treasurer is giving a press conference now. He says it’s “welcome news for Australian households and businesses” and saus the government expects the banks to pass the cut on to borrowers. | The treasurer is giving a press conference now. He says it’s “welcome news for Australian households and businesses” and saus the government expects the banks to pass the cut on to borrowers. |
| It is the government’s expectation, indeed, it is the public’s expectation that banks should pass on, in full, to consumers, the benefits of reduced funding costs as a result of the Reserve Bank’s decision. The impact of a 25 basis-point cut on a $400,000 mortgage is the equivalent of saving around $60 a month or $720 a year. A timely boost for households... | It is the government’s expectation, indeed, it is the public’s expectation that banks should pass on, in full, to consumers, the benefits of reduced funding costs as a result of the Reserve Bank’s decision. The impact of a 25 basis-point cut on a $400,000 mortgage is the equivalent of saving around $60 a month or $720 a year. A timely boost for households... |
| If you thought 1.25% was low .... | If you thought 1.25% was low .... |
| The gurus at Capital Economics think the cash rate might fall as low as 0.75%, spruiking their own early predictions that the RBA would start cutting this year in the face of a falling housing market. | The gurus at Capital Economics think the cash rate might fall as low as 0.75%, spruiking their own early predictions that the RBA would start cutting this year in the face of a falling housing market. |
| In a note after the RBA call, Capital notes the bank is sticking to its “glass-half-full rhetoric” about the Australian economy. But it believes most anlaysts are too optimistic about the outlook. It sees GDP falling to 1.5% compared with the bank’s 2.75% forecast and inflation staying at 1.7%. | In a note after the RBA call, Capital notes the bank is sticking to its “glass-half-full rhetoric” about the Australian economy. But it believes most anlaysts are too optimistic about the outlook. It sees GDP falling to 1.5% compared with the bank’s 2.75% forecast and inflation staying at 1.7%. |
| The upshot is that we expect the RBA to slash rates to 0.75% before the year is out. Rates falling below 1% will surely heighten speculation that the Bank will soon launch quantitative easing but we think that’s rather unlikely. | The upshot is that we expect the RBA to slash rates to 0.75% before the year is out. Rates falling below 1% will surely heighten speculation that the Bank will soon launch quantitative easing but we think that’s rather unlikely. |