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Rate cut not sign economy struggling: govt

AAP logoAAP 2/08/2016

Treasurer Scott Morrison says the Reserve Bank's decision to cut the official cash rate to a record low 1.5 per cent is not a sign of a struggling economy.

"We are growing at 3.1 per cent, tell me five advanced economies that are doing better than that, and you won't," Mr Morrison told Sky News.

But he said Australia is part of a global phenomena of low interest rates, low inflation and low rates of investment.

The Commonwealth Bank was the first retail bank to respond to the official 0.5 per cent rate reduction, but only lowered its standard variable rate by 0.13 per cent, although it is offering higher deposit rates to its customers.

"There is certainly no argument for banks not to pass on rates on the basis of their cost of funds overseas at the moment," Mr Morrison said.

However, he said it is not often when you get a cut in the cash rate that depositors actually get a bit of good news, "it's usually the opposite".

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