Treasurer Josh Frydenberg says it’s up to customers to decide whether ANZ and Westpac will be punished for refusing to pass on the full interest rate cut.

The Reserve Bank of Australia yesterday reduced the official cash rate by 25 basis points to a record-low of 1.25%

RBA Governor Philip Lowe took the unusual step to urge banks to pass on the cut in full.

The Commonwealth and NAB did just that, but the ANZ and Westpac have only passed on some of the reduction.

Mr Frydenberg said it’s “disappointing”.

He revealed to Neil Mitchell he has since had private conversations with the bank bosses to make himself “very clear”, but remains powerless to enforce the cut.

“Ultimately they’re businesses, they’ve got to act in the best interests of their customers and shareholders,” he said.

“But if they’re not delivering for their customers, their customers will walk.”

Click PLAY for the full interview