As Canberra tells borrowers to switch banks if their interest bills are not trimmed in the wake of official cash rates falling to near zero, the National Farmers Federation wants all finance deals to reflect the cuts - not just home loans.
"We need to see lower rates on working capital accounts, asset backed finance and short-term loan products, said NFF's chief economist and trade general manager Ash Salardini.
The Reserve Bank of Australia's new, potentially three-year, low rate decision is part of a big package of measures to push the economy out of the coronavirus recession, including a $100 billion government bond-buying program.
The RBA has also cut the interest it charges the retail banks on a $200 billion line of credit available to provide cheap money to small and medium-sized businesses.
"The $100b quantitative easing program and the cut to the cash rate to just 0.1 per cent means money has never been cheaper for the banks ," Mr Salardini said.
"This needs to be reflected in the interest rate of all loan products they offer, not just headline home loan rates.
"Banks are very good at passing on the savings to headline grabbing home loan rates, but never seem to get around to reducing the rates for other loan products, particularly those that businesses and farmers rely on."
It would be a shame if they undid their good work (during the COVID-19 lockdowns) by opting for short-term profit taking at the expense of business account holders
- Ash Salardini, National Farmers Federation
The peak farm body has fully supported pressure on the retail banks from Treasurer Josh Frydenberg, Agriculture Minister David Littleproud and the RBA, pointing out there was no excuse for lenders to hold back from passing the rate cuts to all households and businesses.
Mr Salardini said banks had demonstrated very good corporate citizenship in the way they handled loan deferments for households and businesses through COVID-19 lockdowns.
"It would be a shame if they undid this good reputational work by opting for short-term profit taking at the expense of business account holders," he said.
RBA governor Dr Philip Lowe said he expected banks to help the economy recover from an uneven recession and avoid a long-term unemployment blowout.
"I encourage everybody to go to their bank and ask for a better deal," said Dr Lowe, how hoped there would be an immediate reduction in standard variable rates.
"If they don't give it to you, switch to a bank that will."
Treasurer Mr Frydenberg also expressed the expectation banks would look for ways to pass on the Melbourne Cup day rate cut.
"Some of the banks have already priced in today's announcement by the Reserve Bank - it had been highly forecast and highly expected," he said.
"That being said, the banks, no doubt, will look for other ways to pass on this lower cost of borrowing for them, whether it's for small business loans or whether it's for fixed mortgage rates as well."
Agricultural lender Rural Bank said it took a range of factors into consideration when setting account rates for both lending and deposit customers.
It was due to discuss our rates at a meeting of its pricing committee on Friday.
The RBA will buy $100b in both federal and state government bonds this financial year as part of a strategy to drive down interest rates on five and 10-year bonds.
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
