Australia's big four banks are in an excellent position to pass on all of the latest rate cut of 25 basis points, Reserve Bank calculations show.

But none of the big four responded on Tuesday, leaving it to the smaller Bank of Queensland, which passed on 20 basis points and ING Direct, which passed on the full cut.

The Prime Minister, the Treasurer and the shadow treasurer, Joe Hockey, all implored the banks to pass on the cut in full, Mr Hockey qualifying his appeal by saying that if they did not they should give their customers a complete explanation.

The Reserve Bank calculations show the banks in a better cost position than in October when the Commonwealth, ANZ and National Australia banks passed on only 20 basis points of the 25 basis points cut and Westpac only 18 basis points.

Reserve Bank governor Glenn Stevens said in a statement issued with the rates decision that Australian banks had ''no difficulty accessing funding, including on an unsecured basis''.

Treasurer Wayne Swan said while ING Direct had done the right thing by its customers, the other banks had not. Prime Minister Julia Gillard said that with Christmas approaching the big four ''should take into account that Australian families will be looking to them to pass the interest rate reduction on in full''. If fully passed on the cut would slice a further $47 from the monthly cost of servicing a $300,000 mortgage, bringing the total saving since the cuts began last November to $270 a month.

The Reserve cut rates because of signs the business investment outlook is weakening, not only in mining but also in the non-mining economy.

It pays close attention to the National Australia Bank survey of business confidence which shows business conditions at their weakest in three years. It wants to strengthen other parts of the economy to take up the slack as the mining investment boom passes.

If necessary it will cut rates again to sustain economic growth, restrained only by its inflation target. Late on Tuesday the futures market assigned a 67 per cent probability to a further cut of 25 basis points at the board's next meeting in February.

The board does not believe it has cut rates to ''emergency levels''.

But Mr Hockey said the bank was ''trying to catch a falling Australian economy. It had ''dropped rates to emergency levels, not because the economy is doing well but because it is facing huge challenges''.

The cut from 3.25 per cent to 3 per cent brings the bank's cash rate to the low point reached at the trough of the 2009 global financial crisis.

But unlike during the financial crisis it has not been brought there by a series of dramatic, unprecedentedly large cuts, has not been accompanied by a dramatic boost in government spending, and has not been accompanied by an unusually low Australian dollar but by a near-record high one.

''Anybody who would go out there and describe rates now in the same context that they were at the height of the global financial crisis is simply unqualified for high office,'' Mr Swan said.

''Anyone who can't welcome a cut as such good news for families and business is somebody who is just being negative about everything.''