An inconvenient truth
If you are wondering whether the banks will pass on any future rate cuts, you should first ask whether they actually can. Political pressure on banks to pass on rate cuts has continued to intensify. This has contributed to creating a flawed notion that bank funding costs move in lock step with the RBA’s cash rate. If you tracked the movements of mortgage rates and the cash rate between 1998 and 2007 you could be forgiven for thinking that.
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