ANZ increased its rates by 0.06 per cent at its monthly review yesterday.

A couple of hours later Westpac followed suit, lifting its standard variable mortgage rate by 0.10 per cent to 7.46 per cent.

Before the Westpac announcement, an angry Treasurer had laid into the ANZ bank, saying there was no need for the ANZ or any other of the big banks to increase rates.

``I think ANZ customers will be absolutely ropeable with the ANZ,'' Mr Swan said.

``The fact is that the major banks in this country are very profitable. Their net interest margins are back to where they were prior to the global financial crisis.''

Mr Swan said these sentiments applied to all the major banks should they, too, be considering lifting their rates, and urged mortgage holders to shop around.

ANZ chief executive for Australia Philip Chronican said his bank had a ``serious dilemma'' in balancing the rising cost of bank funding and the expectation of borrowers that it keep lending rates as low as possible.

``While we recognise our decision may leave some people frustrated and even angry, we believe Australia needs safe, well-run commercial banks that aren't a burden on taxpayers and that can continue to lend,'' he said.

``The alternative of weak, constrained banks that we see in the US and in Europe is a recipe for stagnation and recession in Australia.''

Westpac head of retail banking Jason Yetton said its decision wasn't an easy one and also cited rising funding costs as the reason.

Opposition treasury spokesman Joe Hockey said Mr Swan was an ``insipidly weak'' treasurer, who talked tough but continued to be ignored by the banks.

``If they have funding problems, the treasurer should be across the issue but clearly he is not across his brief,'' Mr Hockey said.

Greens MP Adam Bandt said the decision was a serious challenge to monetary policy at a time when the national economy was facing serious challenges.