RABOBANK has announced a 1 per cent cut in its variable base rate for rural loans.

The announcement of the cut, effective next Friday, follows the Reserve Bank of Australia's decision to cut interest rates by 1 per cent yesterday.

Rabobank's rural general manager Peter Knoblanche said the cut in the rate was timely as "many in the agriculture sector and still contending with continuing high input costs, volatile commodity prices and challenging seasonal conditions".

The cuts follow the bank's decision to cut rural loan rates by 0.6 per cent last month, 0.8 per cent in October and 0.25 per cent in September.

The move came as the federal government ramped up the pressure on banks to pass on the full 1 per cent rate cut to all their clients, including farmers.

Prime Minister Kevin Rudd said today the banks must do “everything possible” to pass on the rate cut to all users of credit “as rapidly as possible”.

Treasurer Wayne Swan said the banks had “no real excuse” not to cut all their lending rates by 1 per cent because the impact of the financial crisis on their borrowing costs had receded.

The Commonwealth Bank and National Australia Bank yesterday announced they would pass on all the 1 per cent cut in official rates to variable lending rates for both housing and business clients.  But Westpac and the ANZ both stopped short of this, only reducing their variable housing rates by 0.8 and 0.83 per cent respectively.

Federal opposition finance spokesman Joe Hockey accused Westpac and ANZ of gouging their customers by not passing on the latest interest rate cut in full.

“You would think they would pass on the interest rate cut in full, but they didn't, they gouged it,'' he told Fairfax Radio Network today.

“Westpac gouged it, ANZ gouged it. They are gouging small business, they are gouging farmers, and they are gouging credit cards.

“Someone has got to start putting the pressure on.”