Their claim to be two rate rises behind the Reserve Bank's official cash rate of 7.25 per cent no longer holds water.

The banks' benchmark cost of funds, which is the yield on 90-day bank bills, has dropped by that very amount in just two weeks.

Since they're now square, there's no reason they shouldn't match the Reserve's cut so long as the bank bill rate holds.

Oh, since you asked, the cut will be 0.25 rather than the speculated 0.5 per cent, as the Reserve revealed in a throwaway line: "The market now expects two reductions in the cash rate in the coming months."

Since the only time it mentions market expectations is when it approves of them, that's as good as saying a 0.25 per cent cut on September 2 and a follow-up a month later.

Considering it's forecasting inflation will jump to 5 per cent, even that's stretching its credibility.

Certainly a 0.5 per cent cut would smack of panic mode, which it's in but no need to broadcast that widely, is there?

Mind you, plenty of lenders have cut their fixed rates by 0.5 per cent anyway.

The lowest is Resi's 8.52 per cent for three years, some four rate cuts below the bank's standard variable rate, which admittedly nobody pays. (If you do, get on the phone to the bank quick smart - you're being ripped off).

But as soon as the Reserve cuts, fixed rates will fall again, at which time they should be taken seriously. Curiously, the best time to fix is when rates are falling. When they're rising, the banks stay one step ahead so fixing to protect yourself from higher rates is in fact committing yourself to them.

Meanwhile savers should be locking in high and long. A three-month term deposit might pay 0.25 per cent more, but you're left like a shag on a rock when it matures. Instead, you can lock in a rate of 8.65 per cent for up to three years with the Teachers Credit Union (www.teacherscreditunion.com.au), an offer now open to all.