Australia’s big four banks will all cut their interest rates for business customers, following the Reserve Bank’s decision to cut the official cash rate by 25 basis points on Tuesday.
The RBA cut the cash rate to 1.75% on Tuesday afternoon in the first cut to official rates in 12 months.
RBA governor Glenn Stevens said in a statement the bank decided to ease monetary policy in the wake of a lower outlook for inflation in the Australian economy.
“Inflation has been quite low for some time and recent data were unexpectedly low,” Stevens said.
“While the quarterly data contain some temporary factors, these results, together with ongoing very subdued growth in labour costs and very low cost pressures elsewhere in the world, point to a lower outlook for inflation than previously forecast.”
The large banks generally pass on at least some of interest rate cuts to their home loan customers, and apart from ANZ which has passed on 0.19%, the major players have all passed on the full 0.25% this time around, according to this round-up from Finder.com.au.
And in welcoming news for small and medium business operators, the large lenders will also be passing on the full cut to holders of variable business loans.
As of early next week, holders of all ANZ business variable lending products will have their interest rate cut by the full 0.25%, with the change to come into effect on May 13.
National Australia Bank business customers will also see their interest rates cut by 0.25% next week, with the bank announcing the change will be applied from May 16.
Commonwealth Bank will cut is Standard Variable Business Rate by 0.25% from May 20.
Meanwhile, holders of variable rate small business loans with Westpac will see their interest rates fall by 0.25% from May 23.
Small businesses that have loans from the Bank of Melbourne, BankSA and St George will also have their interest rates cut by 0.25% from May 23.
Neil Slonim, an independent banking advisor and founder of thebankdoctor.org, welcomed the cuts this morning but told SmartCompany, as with any change in interest rates, there are winners and losers.
While borrowers will be pleased to see their rates come down, Slonim points out individuals on fixed incomes with term deposits may be less pleased.
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Slonim says it is also interesting to see the banks’ timeframe for passing on the cuts to customers, saying if there is a discrepancy between the time in which the new rates are applied to lenders and borrowers, the banks may have the potential to manipulate that gap to their advantage.
Finder.com.au founder and director Fred Schebesta also welcomed the banks’ decisions to pass on the cuts to business customers.
“It’s great to see that business borrowers will be getting a better deal,” Schebesta told SmartCompany.
“Even better news is that all of the big four banks are passing on the full rate cut of 0.25%.
“This will help businesses reduce financial burdens and increase cashflow, which is the ideal scenario for any business owner as they seek to invest time and money into their long-term futures.”