As was widely expected, this afternoon the Reserve Bank of Australia cut the cash rate down to a record low of 0.5%.
The central bank explained that it decided to lower the cash rate by 25 basis points to "support the economy as it responds to the global coronavirus outbreak."
This news hasn't gone down well with shareholders of the big four banks, which were already struggling with their margins. The shares of all four banks have reversed their gains and are now trading notably lower in late afternoon trade.
Have the banks responded to the cut?
The Westpac Banking Corp (ASX: WBC) share price was up as much as 2% at one stage today, but is now down over 1.5% after being the first bank to respond to the Reserve Bank's cash rate cut.
This afternoon Westpac announced that it would reduce variable interest rates by 0.25% per annum for home loan and small business customers.
The reduction means an owner occupier customer with a standard variable home loan of $400,000 on principal and interest repayments will save an extra $60 per month, or $720 per year.
These changes are due to come into effect on March 17.
What about the other banks?
Soon after, Australia's largest bank Commonwealth Bank of Australia (ASX: CBA) responded to the RBA's rate cut by also reducing standard variable interest rates by 0.25% per annum.
This means its owner occupied principal and interest standard variable rate home loans are now down to 4.55% per annum.
At the time of writing, neither Australia and New Zealand Banking Group (ASX: ANZ) nor National Australia Bank Ltd (ASX: NAB) have announced their plans.
However, with their other two rivals passing the rate cut on in full, it would be difficult for either bank to not do the same.
