Australia stocks climb after central bank cuts interest rates

RBA rate meeting at bottom of hour

However, he said borrowers should not expect the full 0.25 per cent to passed on by their bank.

Treasurer Josh Frydenberg slammed the stinginess.

Comparison site Mozo estimates the big four banks have clung onto an extra $4.7 billion since 2016 by not passing on the full cuts.

"About three quarters of the developed economies in the world have inflation rates below two per cent and about a third of them have inflation rates below one per cent", he told 3AW radio on Wednesday.

Reserve Bank Governor Philip Lowe said the outlook for the global economy "remains reasonable", but the risks were tilted to the downside.

The central bank recognized there were some undesirable effects from cutting rates, Lowe said, stating that "many people" had written to him complaining that low rates were hurting their finances.

The Commonwealth Bank was the first of the big four banks to trim its interest rates in response to the RBA's move.

"This was a considered decision balancing the needs of our customers in a low rate environment as well as the performance of our business and our role in stimulating the economy", he said.

The big banks will come under immediate pressure to pass on the rate cut to customers, an action which would lower mortgage and loan repayments but also lead to lower returns for those with money in savings accounts.

It tried to pat itself on the back for limiting the cut to a key deposit product to 0.05 per cent, but failed to disclose the rate would then be just 0.1 per cent.

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Following October's RBA rate cut, there was a 69 per cent spike in visitors across all Finder home loan pages, including a 296 per cent jump in views of the variable home loans page, week-on-week.

Some of the smaller lenders have passed on the rate cut in full.

Followers on twitter in general reacted with disappointment, seemingly frustrated that CBA did not pass the rate cut on in full.

Financial futures 0#YIB: are pricing in a fourth cut to 0.5% by early next year.

Dr Lowe said its board had acted to support employment growth, which was slowing from fast levels, and to increase disposable incomes.

"Assuming the RBA refrains from implementing negative rates in practice, we estimate that an equivalent amount of stimulus could be delivered by lowering rates to their effective lower bound (GS: 0-0.25%) and implementing a QE program worth around A$200 billion", the Goldman economists said in a report dated October 1. A gentle turning point, however, appears to have been reached with economic growth a little higher over the first half of this year than over the second half of 2018.

Treasurer Josh Frydenberg said the cuts were a reflection of what's been happening globally.

However, while CBA cut its standard variable rate for home loan customers by between 0.13 and 0.25 per cent it did not match the RBA's cut completely.

"Westpac will be decreasing interest rates by 15 basis points for variable home loan customers, bringing our Standard Variable Rate (SVR) to the lowest we have on record for owner occupiers with principal and interest repayments", David Lindberg, Westpac Chief Executive, Consumer said.

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