By Tuesday evening silence reigned over the sector, with the big four simply saying their interest rates were under review.
Bank of Queensland (BOQ) was the only institution to respond to the Reserve Bank of Australia's (RBA) 25 basis point interest rate cut.
BOQ took just six minutes to announce it will pass the rate cut on in full to both home and business borrowers, taking its standard variable rate home loans by 25 basis points to 7.36 per cent.
The regional bank's borrowers will have to wait 10 days for the rate cut to take effect despite Chief executive Stuart Grimshaw saying passing on the full cut was the right thing to do by customers.
"Our cost of funds do continue to increase so pricing remains a balancing act of shareholder and customer interests.
"But with Christmas less than three weeks away, we know our customers will appreciate the extra dollars in their wallet as they head in to Christmas celebrations and family holidays."
The major banks' indecision comes amid calls from Treasurer Wayne Swan, retailers, the Australian Chamber of Commerce and Industry (ACCI) and Master Builders Australia to immediately pass the rate cut on in full.
Mr Swan said banks should pass the rate cut through in full and follow BOQ's lead.
Families and small businesses would be very angry if banks chose not to pass the rate cut on.
"If people are unhappy with their financial institution they do have the option to walk down the road," Mr Swan said.
His comments came hours after global ratings agency Standard & Poor's put Germany, France and 13 other Euro-area nations on review for a sovereign credit ratings downgrade ahead of a European summit to tackle Europe's debt crisis.
Local bankers recently said Europe's debt crisis was restricting the functioning of global credit markets and could drive Australian banks' cost of funds higher.
Banks are also facing margin pressure from price discounting on loans and their reluctance to lower interest rates paid to depositors.
ANZ Bank last month suffered a three basis point margin compression for the second half of fiscal 2011, while Commonwealth Bank forecast a nine basis point fall in its underlying margin to 2.10 per cent in 2012.
Shares in the big four declined by at least 0.29 per cent, while BOQ's stock gained one cent to $7.94.
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