Summary:
This week’s cash rate expectations signal a cautious market stance after the RBA left rates steady in its meeting earlier in the month, surprising many economists who predicted a rate cut by 25bps. The current cash rate sits at 3.85% compared to the cycle peak of 4.35% that was reached in September 2023. The first cut in the current cycle was delivered by the RBA on 19th February 2025.
The market is pricing in a 75-basis point cut over the next year, targeting a 3.1% cash rate by mid-2026, influenced by recent economic data including the CPI and US Fed Reserve decision to keep rates steady in the US. RBA does not appear to be concerned about the recent increase in Australian unemployment rate, siting tight labour market conditions. So while the market participants are focused on growth and employment concerns, the RBA is taking a more balanced approach to both growth and inflation given the uncertainty around tariff impact within the context of tight labour market.
The first and second order effects of US tariffs are yet to be known, and it is understandable why the RBA is somewhat cautious in its monetary policy stance.
Figure 1: Swaps on RBA Rate Cuts
-
Product Interest
Rate p.a.Notes AMP Saver Account 4.70% Up to 4.70% pa variable rate on balances up to $500,0001. Applies for customers that meet the eligibility criteria. ANZ Premium 0.05% $10,000 - $249,999 ANZ Progress Saver 3.40% 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 4.55% On balances of $250,000 to $499,999 Bankwest Hero Saver 4.10% Variable Hero rate on eligible balances up to $250,000.99.# BOQ Fast Track Saver 2.25% ($1,000 deposited + 5 eligible transactions for per month) BoQ Bonus Interest Savings 5.10% Bonus interest is paid into your account when you limit your withdrawals to a maximum of one per month CBA NetBank Saver 4.65% 1.90% p.a. standard variable rate, 2.75% p.a. fixed bonus margin for the first 5 months on your first NetBank Saver CBA Goal Saver Account 4.45% 0.30% p.a. standard variable rate,4.15% p.a. bonus variable interest rate Great Southern Bank 5.64% Owner occupier, principal & interest, LVR 70% or less. Includes discount on new and additional lending. Min. loan amount applies Heritage Online Saver 4.35% Manage your savings online with our high interest savings account. Plus, get a 4 month Bonus Intro Rate* available for new members on balances up to $100,000. ING Savings Accelerator 4.70% from 9 June 2025 and roll higher with our 4.95% p.a. variable kick starter offer.This includes a 0.75% p.a. variable kick starter rate for the first 4 months on balances up to $500,000. After that, roll on with our 4.20% p.a. variable ongoing rate. Macquarie CMA 2.25% Minimum $5,000 ME Online Savings 3.85% Bonus interest applies to balances up to $500,000. NAB iSaver 4.65% This is the total rate (standard variable rate plus fixed bonus margin rate) you could earn for the first four months, if you have not held a NAB iSaver in the last 12 months (on balances up to $20 million). NAB Reward Saver 4.35% This is the total rate (variable base rate + variable bonus rate) you could earn on your NAB Reward Saver account if you meet the variable bonus rate conditions. Rabobank PremiumSaver 4.80% 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 4.55% Minimum $200 deposit each month and no more than 1 withdrawal ubank Save Account 4.85% 5.5% on first $100,000, 5.0% on next $150,000; applies only on amounts upto $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 4.50% 3.15% p.a. for the first 5 months for new Westpac eSaver customers Westpac Reward Saver 4.50% 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.