The decision comes after TreasurerJosh Frydenberg personally urged the banks to pass on any cut in full to borrowers ahead of today's highly-anticipated decision.

Mr Frydenberg on Tuesday described ANZ's decision as"deeply disappointing,"drawing a link between the bank's decision on home loan pricing to the Hayne royal commission into financial misconduct.

"I think the ANZ has let down its customers. This is deeply disappointing from the ANZ. We heard from commissioner Hayne just months ago that the banks were putting profits before people. Actions like this don't give the Australian people any comfort that the banks have changed their behaviour,"Mr Frydenberg said.

Westpac's chief executive of consumer,David Lindberg,said the bank had taken into account the interests of all"stakeholders"in making the decision. “We are operating in a historically low interest rate environment,which creates the opportunity for home-owners to get ahead on their repayments,"Mr Lindberg said.

CBA's group executive in charge of retail banking services,Angus Sullivan,said CBA had considered the funding environment,regulatory commitments,and community expectations in reaching its decision.

NAB's chief customer officer,former NSW premier Mike Baird,said:"We strongly believe reducing rates is the right thing to do by our customers and reflects our focus on earning trust in the community and rewarding our loyal existing customers."

In announcing the cut in official interest rates to a record 1.25 per cent,RBA governor Philip Lowe noted there had been a"further"decline in bank funding costs.

Dr Lowe referred to the rise in bank funding costs of last year,which prompted banks to raise their mortgage rates independently of the RBA. Dr Lowe said money market interest rates had now"fully reversed the increases that took place last year".