Summary: Cash rate expectations for 2024 move lower; cash rate now expected to average 3.89% in November 2024; 3-month BBSW steady; no changes to surveyed ADI cash rates.
Expectations moved this week in a manner which suggested the path of the cash rate will be lower over the next eighteen months in comparison with its expected path at the end of the previous week. Contracts at the end of the week implied the cash rate would remain close to the current rate of 4.32% and average 4.31% through January and 4.325% in February. However, May contracts implied a 4.23% average cash rate, August contracts implied 4.07% and November contracts implied 3.89%, 43bps less than the current rate.
Since March 2020, the RBA has not enforced its cash rate target by draining liquidity from the banking system. As a result, the actual cash rate has been several basis points below the target rate. Contract prices reflect expectations of the average actual cash rate in a given month, not the target rate, although the former is obviously related to the latter.
November’s preliminary retail sales report was published on Tuesday and it indicated retail spending had jumped by 2.0%, greater than with the expected 1.2% increase.
November dwelling approval numbers also came out. Total approvals rose by 1.6% for the month but fell by 4.6% over the year. Approvals for houses decreased while apartments approvals increased.
The ABS’ monthly CPI report was released midweek. The CPI rose by 4.3% over the year to November, down from 4.9% in October. The trimmed mean measure slowed from 5.3% to 4.6%.
Preliminary goods trade figures for November were released the next day. They indicated Australia’s trade surplus in goods increased from $7.7 billion after revisions in October to $11.4 billion. Good exports rose by 1.7% to $46.3 billion while imports fell by 7.9% to $34.9 billion.
At the end of the week, November home loan approval figures indicated total approvals excluding refinancing increased by 0.5% by value over the month and were 10.6% higher over the twelve months to November.
3-month BBSW is a useful benchmark for cash rates and it finished the week unchanged at 4.36%. The RBA’s target for the overnight lending rate between banks is 4.35% but actual overnight interbank loans are being negotiated at 4.32%, 3bps below the target but 7bps above the RBA’s exchange settlement account (ESA) rate for ADI deposits with it.
There were no rate changes made by deposit-taking institutions in our survey of cash account interest rates this week.
CASH ACCOUNTS
| Product | Interest Rate p.a. | Notes |
|---|---|---|
| AMP Saver Account | 5.20% | Min. monthly $1,000 dep. Limit $250,000. |
| ANZ Premium | 0.05% | $10,000 - $499,999 |
| ANZ Progress Saver | 4.25% | Make at least one deposit of $10 or more in a month, make no withdrawals (including transfers), or incur any fees, charges in the month. |
| Arab Bank Online Savings | 1.00% | On balances of $250,000 to $499,999 |
| Bankwest Smart eSaver | 2.45% | On balances up to $500,000.99 with no withdrawals in that month |
| BOQ Fast Track Saver | 2.75% | $1000 minimum monthly deposit. On balances up to $250,000, over part the Base Rate of 0.05% p.a. applies |
| BoQ Bonus Interest Savings | 2.75% | Bonus interest is paid into your account when you limit your withdrawals to a maximum of one per month |
| CBA NetBank Saver | 2.35% | 2.40% p.a. fixed bonus margin for the first 5 months on your first NetBank Saver |
| CBA Goal Saver Account | 4.90% | At least 1 deposit required; balance at end of month must exceed balance at start of month. |
| Great Southern Bank | 4.20% | No bonus conditions |
| Heritage Online Saver | 3.45% | $1 or more, bonus intro rate 1.45% (promotional 4 month rate on new accounts up to $100,000) |
| ING Savings Accelerator | 4.70% | $150,000 and over |
| Macquarie CMA | 3.00% | Minimum $5,000 |
| ME Online Savings | 4.25% | Have both Online Savings Account and Everyday Transaction Account. On balances up to $250,000. Make at least four "tap & go" purchases per month. |
| NAB iSaver | 2.00% | Bonus rate 2.65% for the first four months when you open your first NAB iSaver account |
| NAB Reward Saver | 5.00% | make at least one deposit on or before the second last banking day of the month and no withdrawals during the month |
| Rabobank PremiumSaver | 5.10% | On balances to $250,000. Balance increased by $200 a month. |
| RAMS Saver Account | 1.40% | On balances to $500,000. Minimum $200 deposit each month with no withdrawals. |
| Suncorp Growth Saver | 5.05% | Minimum $200 deposit each month and no more than 1 withdrawal |
| ubank Save Account | 5.10% | On a combined balance of up to $250,000. Minimum $200 deposit each month into Spend or Save accounts. |
| Up Savers Account | 4.35% | Make 5 successful purchases using your Up or 2Up debit card or digital wallets in a month. |
| Westpac eSaver | 1.10% | 4.25% p.a. for the first 5 months for new Westpac eSaver customers |
| Westpac Reward Saver | 5.00% | Make a deposit to the account and ensure account balance is higher at the end of the month than the beginning. Keep your account balance above $0 at all times. |