Banks should pass on rate cut in full: PM

Prime Minister Malcolm Turnbull says Australia's major banks should pass on the latest reduction in the official cash rate in full or their chief executives must give a clear explanation when they don't.

"They operate with a very substantial social licence, and 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," Mr Turnbull told reporters in Canberra on Wednesday.

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.