RURAL lenders have already started adjusting variable interest rural loan rates, following yesterday’s Reserve Bank of Australia decision to drop the official cash rate by 25 basis points.

The RBA yesterday cut the official cash rate to 3.6 percent, after it surprised many by keeping rates on hold last month.

The interest rate cut means that the cash rate has now fallen by 75 basis points since the start of this year, with the RBA saying that underlying inflation is continuing to decline back towards its target ‘mid-point’ of 2-3pc.

Rabobank has been the first mover among the ‘big five’ rural lenders, announcing plans this afternoon to lower its variable base rate on its rural loans by 0.25pc per annum, effective August 22.

Rabobank group executive for Country Banking Australia Marcel van Doremaele said the bank was pleased to be able to once again pass on the full OCR reduction to its Australian rural lending clients.

“This latest reduction – along with two previous 0.25pc cuts to the variable base rate in February and May – will provide some welcome relief to farmers in helping to reduce their business costs,” he said.

“Combined with the improvement we have seen in seasonal conditions in a number of drought-affected regions in recent weeks – along with forecasts of above-average rainfall in spring for much of mainland Australia – this helps set up the sector for a positive outlook for the remainder of the season.”

Australia’s largest business bank, NAB, has also announced it will reduce interest rates on eligible business lending products by 0.25pc per annum, following the RBA decision.

New and existing business customers with a variable rate NAB Business Options Loan or a NAB Business Overdraft product will have their interest rate reduced, effective from Monday 25 August.

NAB Group Executive for Business & Private Banking Andrew Auerbach said: “Business is the heartbeat of Australia’s economy and we know lower interest rates drive greater confidence right across the business community.

“Many of our business customers also bank with us personally, so we are confident the combined impact of rate reductions across our business and home lending products will contribute positively to that.

“While lower interest rates are welcome news, we know some business customers are facing tougher trading conditions which is why we have a range of support options available to those who need it,” he said.

Eligible business customers will see their new interest rate reflected on their next statement after Monday, 25 August.

The change in business products comes after NAB’s decision to reduce the standard variable interest rate on NAB home loan products by 0.25pc p.a.

Beef Central has sought updates from other lenders over responses to the RBA cash rate adjustment. Details will be added here if they arrive.

In announcing the rate cut yesterday, the RBA said a reduction in inflation and labour market conditions easing slightly were the main reasons the board thought a rate cut was appropriate.

“The board nevertheless remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and potential supply,” the announcement said.

“It noted that monetary policy is well placed to respond decisively to international developments if they were to have material implications for activity and inflation in Australia.”