Banks should follow RBA's rate moves, says union leader

Business banking customers were given a boost earlier this month when the Reserve Bank of Australia (RBA) lowered interest rates across the country.

By reducing the national cash rate to 3.75 per cent, companies were hopeful that the repayments on their business loans would have been more manageable.

However, none of the major banks passed on the cut in its entirety, which has raised questions about the RBA's authority.

According to leader of the Australian Workers Union Paul Howes, the government should step in and force lenders to follow the rates set by the RBA more closely, the Australian Associated Press reports.

He suggested that current legislation gives banks too much power to do as they please and this is bad for competition.

"It's time for an active government to pull the financial services sector back into line," he was quoted as saying.

Mr Howes added that such action is needed in order to stimulate economic growth down under.

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