Australia’s major banks quickly followed suit in the Reserve Bank’s recent rate cut, but they might not move as quickly if another cut is on the horizon for 2016. 

According to IG markets analyst Angus Nicholson, the banks’ haste in cutting rates could be linked to the Labor opposition’s threat to launch a Royal Commission into the industry if it wins the federal election.

“If the next rate comes after the LNP winning the election, which most markets are pricing for at the moment, then perhaps there might be less of an incentive for them to pass on the full cut,” Nicholson said. “It would help the banks if they were allowed to keep more of the rate cut.”

Commonwealth Bank, National Australia Bank, and Westpac passed on RBA’s 0.25 per cent rate cut in full to variable rate loans early this week. Meanwhile, ANZ opted for a 19-basis point rate cut. RBA’s cash rate was aimed at pushing the nation’s sluggish inflation rate into the target band of two to three per cent.  Analysts expect another rate cut in the near-term.

With ANZ revealing a slumping half-year profit and Westpac reporting slower profit growth, pocketing some of the RBA cut could ease pressure on the margins.

“Higher funding costs mean we are only in a position to pass on a portion of the reduction in the cash rate to our customers,” said ANZ group executive Fred Ohlsson during the bank’s announcement of its 19-basis point rate cut.