National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp
(ASX: WBC) both cut interest rates for borrowers today.
The Reserve Bank of Australia is Australia’s central bank. One of its biggest roles is to decide Australia’s interest rate, taking into account economic conditions including unemployment, inflation and the housing market. The RBA interest rate has a ripple effect across the whole economy.
What Happened Today?
The RBA decided to cut interest rates by 0.25% to 1.25% today. Australia and New Zealand Banking Group (ASX: ANZ) did not pass on the full interest rate, instead only passing on 0.18%, but Commonwealth Bank of Australia (ASX: CBA) did pass on the full rate cut.
The other two major ASX banks then announced what they’re going to do. National Australia Bank Ltd (ASX: NAB) also decided to cut its interest rate by 0.25% but Westpac Banking Corp (ASX: WBC) only passed on 0.20% of the rate cut.
Westpac and ANZ stand apart by trying to boost their bottom line. Borrowers and politicians may react to the less-than-full rate cuts negatively. Time will tell what happens and if they lose market share.
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