Our biggest banks move fast. Either that, or they collude. At 2.37pm on Tuesday, within minutes of the Reserve Bank cutting its cash rate to an all-time low, the Commonwealth Bank announced a completely different way of responding. Instead of passing on some or all of the cut, it would only pass on half and hand some of the rest out to customers as higher term-deposit rates.
Less than two hours later, at 4.31, the National Australia Bank had announced its own variant on the idea. Either it had very quickly assessed the Commonwealth Bank's plan and ran a variant of it through all of its decision-making processes, or it had some inkling of what the Commonwealth might do, which would probably be illegal under the anti-signalling provisions introduced into competition law in 2011 by the then treasurer, Wayne Swan, in frustration with a string of coincidences in the way the banks responded to Reserve Bank rate moves.
Of course, there's another possibility, a genuine coincidence. The NAB may have independently made the same tentative decision as the Commonwealth ahead of the Reserve Bank's announcement and had its announcement ready to go.
Glenn Steven's decision needs less explaining. The Reserve Bank governor could see the labour market needed a boost and that knew. Australia's ultra-low 1 per cent rate of inflation didn't stand in the way. Nor did the prospect of a boom in house prices. Although the CoreLogic data series shows home prices climbing 5.6 per cent in Sydney and and 3.5 per cent in Melbourne just the last three months, most other data series don't. The Reserve chose to believe the other series, and the data that shows home loans and real estate turnover slowing.
The Reserve has no plans to cut rates again for some time, certainly not in Glenn Stevens' time. The Governor retires next month, having overseen a tumultuous period in which he drove the cash rate up from 6 per cent to 7.25 per cent and then all the way down 1.5 per cent, a previously unheard-of low.
How the big banks cut
Westpac: 5.29% (cut of 0.14 points)
NAB: 5.25% (cut of 0.10 points)
ANZ: 5.25% (cut of 0.12 points)
Commonwealth: 5.22% (cut of 0.13 points)