Cash Accounts October 2015

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There were no changes to the RBA’s cash rate in October. The statement from October’s RBA meeting pointed to the domestic economy expanding moderately, offshore weakness, a strong US economy and it was generally seen as being vaguely hawkish. However, by the end of the month the probability of another rate cut implied by cash market prices had changed and the odds of cut in the first and second quarters of 2016 had shortened sharply. Increases in mortgage rates by the major banks were seen as a de facto tightening of monetary policy and some economists thought a cut by the RBA would be required to balance this out. Remember that borrowers don’t borrow at the RBA’s cash rate. They borrow at bank rates. So when banks put rates up independently of an RBA rate move, this has the effect of a monetary policy tightening. The RBA for its part, while happy to take the heat out of the housing market, will want to ensure domestic spending is not curtailed by the move.

Cash markets agreed with this analysis and increased the probability of a November or December rate cut with a November rate change seen as an outside chance. As we reached the end of October, the chance of a single rate cut is being priced as a certainty by February 2016 (previously a cut by March was considered a certainty) and markets were pricing in a second rate cut as a 72% chance by August 2016. At the end of September, the odds were only 50/50.100115 Cash Rate Expectations[/private]

CASH ACCOUNTS

ProductInt p.a.Special Cond
AMP Saver Account2.60%31 days’ notice
AMP Notice Account2.70%
ANZ V2 Plus0.50%1 dep no w/draw mth
ANZ Progress Saver2.71%Min balance $5,000
Arab Bank Online Savings2.30%Up to $500k.
Bankwest Smarter Esaver2.80%Zero w/draw pm up to $500k
Bankwest Solid Gold Saver2.25%$10k+
BoQ Cash Man Account2.15%Limit 1 w/draw pm
BoQ Bonus Interest Savings2.75%$250k+
CBA NetBank Saver1.85%$200pm dep, $100k lim, 1wd pm
CBA Goal Saver Ac2.80%
CUA eSaver Plus Account2.90%
Heritage Online Saver2.70%$750,000+
ING Savings Accelerator2.75%$150k+
Macquarie CMA1.90%
ME Online Savings2.25%
NAB Isaver1.90%
NAB Reward Saver3.05%1 dep no w/draw mth
Rams Saver Account3.60%$200 pm no withdrawal
Suncorp eOptions1.90%
Usaver2.31%$200 pm up to $200k
Usaver Ultra3.37%Up to $200k +$2k pm dep
Westpac eSaver1.75%
Westpac Reward Saver2.50%dep $50 and no withdrawals