There were no changes to the RBA’s cash rate in November. The governor’s statement after the meeting was thought to have re-introduced a mild easing bias and the quarterly Statement on Monetary Policy lowered growth and inflation forecasts yet again. Unemployment forecasts were kept steady but Glenn Stevens noted spare capacity in economy was expected to remain for some time. The markets focused on the ‘out-of-cycle’ rate hikes by the four major banks as a de facto monetary tightening but a speech by the governor pointed (RBA chief regarding mortgage rates) that was not an immediate reason to cut rates as it was only taking back some of the margin previously given away by the banks.
The release of the strong October employment figures was immediately followed by cash markets lowering the probability of December rate cut to from 22% to 8%. At the end of October a rate cut in February had been seen as a certainty and a second rate cut in mid-2016 was a fair bet but after the employment figures the odds of even one rate cut blew out considerably. The month ended with softer than expected capex figures but cash markets barely responded. Cash markets are still factoring in a good chance of a rate cut in 2016 with the chance of a February to April rate cut put at around 40% and a cut between August and November at 68%. It is worth keeping in mind the cash market has exhibited a tendency in the past to dramatically change these probabilities on the strength of one piece of economic news and in mid-October the likelihood of a second rate cut to 1.50% was being priced at an 88% chance. This is reflected best in the chart below.
Over the course of the month there were three changes to cash account rates and they were all reductions. National Australia Bank’s iSaver account rate was reduced its rate by 10bps, RAMS Saver Account’s rate was reduced by 20bps and the ME Bank Online Savings Account rate was reduced by 25bps.
|Product||Int p.a.||Special Cond|
|AMP Saver Account||2.60%||31 days notice|
|AMP Notice Account||2.70%|
|ANZ V2 Plus||0.50%||1 dep no w/draw mth|
|ANZ Progress Saver||2.71%||Min balance $5,000|
|Arab Bank Online Savings||2.30%||Up to $500k.|
|Bankwest Smarter Esaver||2.80%||Zero w/draw pm up to $500k|
|BoQ Cash Man Account||2.15%||Limit 1 w/draw pm|
|BoQ Bonus Interest Savings||2.75%||$250k+|
|CBA NetBank Saver||1.85%||$200pm dep, $100k lim, 1wd pm|
|CBA Goal Saver Ac||2.80%|
|CUA eSaver Plus Account||2.90%|
|Heritage Online Saver||2.70%||$750,000+|
|ING Savings Accelerator||2.75%||$150k+|
|ME Online Savings||2.00%|
|NAB Reward Saver||3.05%||1 dep no w/draw mth|
|Rams Saver Account||3.40%||$200 pm no withdrawal|
|Usaver||2.31%||$200 pm up to $200k|
|Usaver Ultra||3.37%||Up to $200k +$2k pm dep|
|Westpac Reward Saver||2.50%||dep $50 and no withdrawals|