First bank passes on full rate cut

The lender was unable to make any further comment.

The news comes after the RBA today cut the official cash rate to a record-low 2.25 per cent, its first move in 16 months.

“For the past year and a half, the cash rate has been stable, as the Board has taken time to assess the effects of the substantial easing in policy that had already been put in place and monitored developments in Australia and abroad,” RBA governor Glenn Stevens said.

“Taking into account the flow of recent information and updated forecasts, the Board judged that, on balance, a further reduction in the cash rate was appropriate,” Mr Stevens said.

“This action is expected to add some further support to demand, so as to foster sustainable growth and inflation outcomes consistent with the target.”

Mr Stevens noted that credit growth picked up to moderate rates in 2014, with stronger growth in lending to investors in housing assets.

“Dwelling prices have continued to rise strongly in Sydney, though trends have been more varied in a number of other cities over recent months,” he said.

“The Bank is working with other regulators to assess and contain economic risks that may arise from the housing market.”

The central bank’s decision has come as a surprise: a finder.com.au survey of 30 economists and commentators found that 28 expected the cash rate to remain unchanged.

However, a rate cut is hardly a shock given the weight of speculation that has occurred since the last board meeting on December 2.

Westpac, NAB and ANZ all subsequently forecast that rates would fall sometime in the first half of 2015.

The two survey respondents who predicted today's cut were Bill Evans, chief economist at Westpac, and Nathan McMullen, head of product and digital at RAMS.