Today's move by Melbourne-based ANZ may prompt even more ire from the public, not least because most commentators and investors bet the RBA will cut official cash interest rates when its board next meets on May 1. The central bank left its cash rate unchanged earlier this month at 4.25 per cent but made it clear that it would lower its cash rate at its May meeting provided the March inflation figures - due out on April 24 - are benign. 'Very upset' Treasurer Wayne Swan blasted today's move by the ANZ bank. "There’d be a lot of ANZ customers very upset today about this decision by ANZ to jack up rates, coming after their recent massive profit announcement and staff sackings," Mr Swan said in a statement.

"ANZ's decision to whack its customers at a time when many of them are doing it tough flies in the face of recent Reserve Bank statements saying funding costs for banks have eased," the Treasurer said. Mr Swan repeated comments made by ministers last time the ANZ raised rates out-of-sync with the RBA, saying that ANZ customers should consider changing their bank. "ANZ’s decision will have a lot of its customers asking whether ANZ deserves their loyalty and looking closely at the better deals on offer from other financial institutions," he said. There’d be a lot of ANZ customers very upset today about this decision by ANZ to jack up rates Funding costs blamed

The rate increase adds an extra $3.25 a week to the cost of a typical $280,000 loan. Small business customers will have to pay another $1.50 a week on a standard loan of $130,000. ANZ's increase put it in the middle of the major banks' rates. National Australia remains the lowest at 7.31 per cent, Commonwealth Bank is at 7.41 per cent and Westpac charges 7.46 per cent - prior to any changes that may result from the ANZ's action today. ANZ's Australian boss Phil Chronican defended today's move, saying funding pressures continue to push up costs for the bank. "The funding environment changed quite dramatically in late 2011 as a result of the economic and financial crisis in Europe. This has seen wholesale funding costs rise and competition increase dramatically among banks for deposits ," Mr Chronican said. “We accept our response to the new funding environment is difficult for some of our customers - even though deposit customers have benefited from better rates ," he said.

“Given this and the volatility we have seen in wholesale funding markets, we wanted to ensure these costs were sustained before we acted to pass them on. We also wanted to pace increases in a way that was manageable for our customers and ensured we were competitively positioned," he said in a statement. Investors cheer Investors may have a different reaction from disgruntled borrowers forced to pay more for their loans. While ANZ shares ended flat today at $22.98, there are already the best performing among the big four banks in 2012. ANZ stock is up almost 12 per cent this year, roughly double the overall market's advance. Their gain tops Westpac's 10.6 per cent rise, is double NAB's 6.2 per cent advance, and easily exceeds CBA's 2 per cent rise. ANZ posted a first-quarter cash profit of about $1.5 billion. The big four banks clocked up profits of almost $25 billion last business year but have signalled that they may only beat that record result this year by squeezing costs given the weakness of general demand.

New mindset ANZ began announcing its mortgage rates changes separately from Reserve Bank movements this year, in an effort to break consumers' perceptions of a link between official and unofficial bank rate settings. Banks such as ANZ routinely blame rising funding costs for the need to lift interest rates, although outside commentators say the slowdown in borrowing growth is likely another motive as banks battle to boost profits. Some lending activities are already at three-decade lows as consumers prefer to pay back loans rather than take on fresh debt. Today's rate rise may be matched by ANZ rivals. It may also be reversed in a month's time if, as expected, the RBA cuts interest rates for the first time in 2012 at its May meeting. Investors are currently viewing the chance of a 25 basis-point cut by the central bank as an 85 per cent chance.

Loading The ANZ's Mr Chronican insisted no ANZ customers have been unfairly disadvantaged relative to the rest of the market since it moved to a monthly independent review of its variable rates. With Clancy Yeates, BusinessDay with AAP