Pass whole rate cut on: Swan

3 Oct 2012, 8:39 am   -   Source: AAP
Treasurer Wayne Swan has urged banks to pass on the full interest rate cut the RBA made on Tuesday. (AAP)

Treasurer Wayne Swan has urged banks to pass on the full interest rate cut the RBA made on Tuesday. (AAP)

Australian families and small businesses deserve to get the full 0.25 point interest rate cut from their banks, Treasurer Wayne Swan says.

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Treasurer Wayne Swan has once again urged banks to pass on the full interest rate cut the Reserve Bank of Australia (RBA) made on Tuesday.

The RBA announced it would cut the cash rate by a quarter of a percentage point to 3.25 per cent in response to a weakening outlook for global economic growth.

Mr Swan said on Wednesday many of the retail banks "have form" in not passing on full cuts but families and small businesses with mortgages deserved the cut.

"I think we'll see a variety of responses from a variety of financial institutions," he told ABC radio.

"From my point of view, the banks should not keep some of this rate cut back, they should pass it through in full."

Shadow treasurer Joe Hockey agreed with Mr Swan, saying the coalition also expected the cut to be passed on.

"Unless the banks can prove that they have serious funding pressures, which the Reserve Bank said they do not ... then there's no excuse for the big banks not to pass it on in full," he told ABC radio.

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