Prime Minister Malcolm Turnbull has delivered a blunt message to the bosses of the nation's major banks.
Pass on the latest reduction in the official cash rate in full or give a clear explanation why you can't.
The big four banks - ANZ, Commonwealth Bank, National Australia Bank and Westpac - made only modest reductions to their standard variable mortgage rates of 0.10 per cent to 0.14 per cent compared with the Reserve Bank's reduction of 0.25 per cent.
Mr Turnbull was unimpressed.
"They operate with a very substantial social licence," he told reporters in Canberra on Wednesday.
"They owe it to the Australian people and their customers to explain fully and comprehensively why they have not passed on the full rate cut."
Treasurer Scott Morrison welcomed the banks' decision to lift deposit rates for various products, but echoed the thoughts of the prime minister.
"There is no reason ... to have retained the benefit of that rate cut for the banks themselves," he told reporters in Adelaide.
Shadow treasurer Chris Bowen said bank customers are right to be "annoyed and disappointed".
"The Reserve Bank has cut interest rates to try and stimulate spending and to stimulate expenditure," he told reporters in Melbourne.
"That won't happen if the banks are using the cut in interest rates to fatten their margins."
Labor continues to pursue the case for a royal commission into the banks.
"We're deeply concerned about the ongoing scandals in relation to financial services more broadly than the events of the last 24 hours," Mr Bowen said.
The government has repeatedly dismissed the idea of a royal commission.
Liberal frontbencher Simon Birmingham said the Australian Securities and Investments Commission already has the powers of a royal commission that can uncover wrongdoing in the banks and ensure prosecutions occur if needed.
"We really should be backing that authority," Senator Birmingham told Sky News.
In cutting the cash rate to a record low on Tuesday, Reserve Bank governor Glenn Stevens noted a "very large decline" in business investment.
Mr Turnbull insists every policy his government took to the election is designed to promote investment.
"If you get more investment, if you get stronger confidence and confidence remains strong, then you will get more jobs," Mr Turnbull said.
But Mr Bowen said the central bank has not cut the cash rate to 1.5 per cent - half the level it was during the 2008-2009 global financial crisis - for no reason.
He said the government does not have a plan to deal with the central bank's concerns and is leaving it to do all the heavy lifting.
"The Reserve Bank can't do it all," he told ABC Radio.
Mr Turnbull said Labor's policies consisted of a series of measures that would discourage investment and inevitably mean less jobs.
"So if Mr Bowen believes Australia needs more investment, he has got to do some homework and come up with policies that will actually promote it," he said.
