There has been plenty of anguish expressed by the apparent failure of the banks to pass on the reduced RBA lending rate. The
Kouk was unimpressed
Frankly, it matters little if banks do or don't pass it on because it will be the behaviour of the economy which is determined by much much more than interest rates and bank margins that will determine future monetary policy moves. If banks don't pass any on, and the economy is weak, then the RBA will cut some more. Obviously.
..it is a completely free way of supporting the banks. It costs nothing to do. There are no extensions of government guarantees, no quantitative easing requirements which screw up your bond and currency markets, no need for the government to write a cheque as the odds of a bank failure shorten. It's a free lunch.
