Summary: Cash rate expectations over next 12 months move lower; cash rate now expected to average 4.26% in May 2025; 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 over the next twelve months will be lower in comparison with its expected path at the end of the previous week. Contracts at the end of the week implied the cash rate has some chance of rising above the current rate of 4.34% in the short-term, with an average of 4.38% expected through August, 4.395% in September, 4.425% in November and 4.38% in February 2025. However, May 2025 contracts implied 4.26%, 8bps below the current rate.
Since March 2020, the RBA has not enforced its cash rate target by completely draining excess 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.
May home loan approval numbers were released at the start of the week. Total approvals excluding refinancing decreased by 1.7% in dollar terms over the month but were up 18.0% over the year. The number of loan commitments to owner-occupiers decreased by 1.6%.
NAB’s June business report was released on Tuesday. The latest reading of its conditions index fell under the long-term average while its confidence index rose back above zero. NAB’s measure of capacity utilisation increased slightly and remains at an elevated level.
The Westpac-Melbourne Institute’s July reading of their consumer sentiment index also came out. The index declined, partially reversing June’s modest gain, leaving it at a reading which is significantly lower than the long-term average.
The Melbourne Institute’s July survey of consumer Inflation expectations came out on Thursday. Consumers expect an inflation rate of 4.3% over the coming 12 months on average, down from 4.4% in June.
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3-month BBSW is a useful benchmark for cash rates and it finished the week unchanged at 4.46%. The RBA’s target for the overnight lending rate between banks is 4.35% but actual overnight interbank loans are being negotiated at 4.34%, 1bp below the target but 9bps above the RBA’s exchange settlement account (ESA) rate for ADI deposits with it.
There were no 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 | 5.40% | 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 | 2.75% | 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 | 5.45% | 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 | 5.20% | On a combined balance of up to $250,000. Minimum $500 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. |