The rate cut was perhaps the most expected for some time, with commentators only differing on the extent of the cut that would be confirmed on Melbourne Cup Day.

It remains to be seen how much of the cut is passed on by the banks, who have been battered by the effects of the global pandemic.

Profits in the banking sector have plummeted and the sector will likely take a while to recover, and while a lot of people might have little time for our banks - who have been among the most profitable in the world, the reality is, we need the banks to be profitable in order for the economy to prosper.

Many Australians have an exposure to banking stocks via their superannuation fund or other investments, and the fallout from the pandemic is certain to be shared among those who hold banking stocks in their portfolio or super fund.

Profitable banks help the rest of the community grow, supporting investment and expansion plans among the business community, financing a record number of home loans to fuel the next home building and jobs boom.

Yesterday's announcement included a reduction in the official interest rate by 0.15 percentage points - the first movement since the RBA slashed rates to the previous historic low of 0.25 per cent in March.

Economists have praised the move as a sensible accompaniment to the federal governments raft of already announced measures to boost the nation's struggling economy.

Any savings that can be passed on to customers by the banks is welcome - and equally deserved.

What comes next remains to be seen, but we are often reminded of a saying from former Bendigo Bank boss Rob Hunt that banks should feed into their customers' prosperity, and not just off it.

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