Police & Nurses a rare rate cutter

The Reserve Bank of Australia is sticking to the under promise and over delivery strategy, cutting the official cash rate by a larger than expected 75 points yesterday, to 5.25 per cent.

The futures market had priced in a 50 point cut, with the larger than expected cut pushing the Australian dollar down around half a cent to 67 US cents during the day.

The only major lender to cut rates yesterday was Commonwealth Bank, reducing the bank's complete home loan variable by 58 basis points to 7.74 per cent, and the economiser base variable to 7.23 per cent. Meetings of the pricing committees of other lenders yesterday were no doubt disrupted by the public holiday in Melbourne and the distractions of the Melbourne Cup.

Business lending, personal loans and credit cards have created less media attention than residential lending, and have not received cuts to the same extent.

One lender to pass on the full 75 point cut to all variable lending products, including business, effective November 10 is the Western Australia based Police & Nurses Credit Society, with the Easypay Home Loan variable, which accounts for 60 per cent of all its residential lending, being reduced to 6.97 per cent.