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.
|Product||Int p.a.||Special Cond|
|AMP Saver Account||2.35%||31 days notice|
|AMP Notice Account||2.45%|
|ANZ Progress Saver||2.26%||Min balance $5,000|
|Arab Bank Online Savings||2.05%||Up to $500k.|
|Bankwest Smarter Esaver||2.45%||Zero w/draw pm up to $500k|
|BoQ Cash Man Account||1.80%||Limit 1 w/draw pm|
|BoQ Bonus Interest Savings||2.55%||$250k+|
|CBA NetBank Saver||1.50%||$200pm dep, $100k lim, 1wd pm|
|CBA Goal Saver Ac||2.35%|
|CUA eSaver Plus Account||2.85%|
|Heritage Online Saver||2.45%||$750,000+|
|ING Savings Accelerator||2.15%||$150k+|
|ME Online Savings||1.55%|
|NAB Reward Saver||2.95%||1 dep no w/draw mth|
|Rams Saver Account||3.15%||$200 pm no withdrawal|
|USaver||2.06%||$200 pm up to $200k|
|USaver Ultra||3.12%||Up to $200k +$2k pm dep|
|Westpac Reward Saver||2.10%||dep $50 and no withdrawals|