11 Jul – 15 Jul 2016

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Economists in general are expecting a 25bps rate cut by the RBA at its August meeting. Notwithstanding strong Australian business conditions, better-than-expected consumer sentiment numbers and sub-6% unemployment, markets believe that Australian inflation is well below the RBA’s target band of 2%-3% and it will take some reasonably strong inflation numbers to move core inflation back into the RBA’s target band. This therefore provides scope for the RBA to ease monetary policy further. Added to this is the headwind of deflation being imported from the global economy. The June quarter inflation number thus becomes a critical reading and this number will not be available until late July.

Pricing in cash markets suggests investors there are not quite as certain as the economists. At the end of the week, the probability of an August cut was 56%. However, by December contracts are priced in such a way as to imply a 1.50% cash rate is a certainty, so perhaps the difference between economists and cash market pricing is just a matter of timing. It does not stop there, either; there’s a 50/50 chance of another cut down to 1.25% by May 2017. The news during the week led to a reduction in probabilities associated with rate cuts, but only in a marginal sense.

There were no changes to rates in our cash accounts table over the week. The account offering the highest rate in the YieldReport survey is the RAMS Saver Account.

cash-deposits-15jul

CASH ACCOUNTS

ProductInt p.a.Special Cond
AMP Saver Account2.35%31 days’ notice
AMP Notice Account2.45%
ANZ Premium1.75%
ANZ Progress Saver2.26%Min balance $5,000
Arab Bank Online Savings2.05% Up to $500k.
Bankwest Smarter Esaver2.45%Zero w/draw pm up to $500k
BoQ Cash Man Account1.80%Limit 1 w/draw pm
BoQ Bonus Interest Savings2.55%$250k+
CBA NetBank Saver1.50%$200pm dep, $100k lim, 1wd pm
CBA Goal Saver Ac2.35%
CUA eSaver Plus Account2.85%
Heritage Online Saver2.45%$750,000+
ING Savings Accelerator2.15%$150k+
Macquarie CMA1.65%
ME Online Savings1.55%
NAB iSaver1.55%
NAB Reward Saver2.95%1 dep no w/draw mth
Rams Saver Account3.15%$200 pm no withdrawal
Suncorp eOptions1.60%
USaver2.06%$200 pm up to $200k
USaver Ultra3.12%Up to $200k +$2k pm dep
Westpac eSaver1.50%
Westpac Reward Saver2.10%dep $50 and no withdrawals