Summary: Cash rate expectations for 2023 higher; cash rate now expected to average 3.35% in May 2024; 3-month BBSW up 19bps; no changes to surveyed ADI cash rates.
Expectations moved this week in a manner which suggested the cash rate will be higher through 2023 and the first quarter of 2024 but lower through the subsequent quarters 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 essentially stay at the current rate of 3.82% to average 3.83% in June, creep up to an average of 3.85% in July and then average 3.86% in August. May 2024 contracts implied 3.35%, down from 3.38% a week ago.
The first reports of the week came out on Monday. The Melbourne Institute’s April reading of its Inflation Gauge indicated the index increased by 0.2% over the month while the annual rate accelerated from 5.7% to 6.1%.
ANZ-Indeed’s April Job Ads survey came out at about the same time. It reported a 0.3% decline for the month and a 5.4% decline over the corresponding month in 2022.
The next day, the RBA unexpectedly announced there would be 25bps increase to its cash rate target and the rate paid on exchange settlement balances.
Preliminary trade figures for March were released on Thursday. They indicated Australia’s trade surplus increased from $14.2 billion after revisions in February to $15. billion. Exports rose by 3.8% to $59.3 billion and imports rose by 2.5% to $44.0 billion.
At the end of the week, the May Statement on Monetary Policy provided an update to the RBA’s various forecasts for GDP growth, inflation and unemployment rates. Forecast GDP growth rates for 2023 were trimmed but later periods’ forecasts were raised modestly. Inflation forecasts were generally reduced.
March home loan approval numbers were also released. They indicated total approvals excluding refinancing increased by 4.9% over the month but were 26.3% lower over the twelve months to March.
3-month BBSW is a useful benchmark for cash rates and it finished the week 19bps higher at 3.87%. The RBA’s target for the overnight lending rate between banks is 3.85% but actual overnight interbank loans are being negotiated at 3.82%, 3bps below the target but 7bps above the RBA’s exchange settlement account (ESA) rate for ADI deposits with it.
There were no changes made by a deposit-taking institution in our survey of cash account interest rates this week.
CASH ACCOUNTS
| Product | Interest Rate p.a. | Notes |
|---|---|---|
| AMP Saver Account | 4.80% | Min. monthly $1,000 dep. Limit $250,000. |
| ANZ Premium | 0.05% | $10,000 - $499,999 |
| ANZ Progress Saver | 3.75% | 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 | 1.85% | On balances up to $500,000.99 with no withdrawals in that month |
| BOQ Fast Track Saver | 2.50% | $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 | 2.25% | Bonus interest is paid into your account when you limit your withdrawals to a maximum of one per month |
| CBA NetBank Saver | 1.85% | 2.40% p.a. fixed bonus margin for the first 5 months on your first NetBank Saver |
| CBA Goal Saver Account | 4.15% | At least 1 deposit required; balance at end of month must exceed balance at start of month. |
| Great Southern Bank | 4.00% | No bonus conditions |
| Heritage Online Saver | 3.05% | $1 or more, bonus intro rate 1.45% (promotional 4 month rate on new accounts up to $100,000) |
| ING Savings Accelerator | 3.70% | $150,000 and over |
| Macquarie CMA | 2.25% | Cash Management Account |
| ME Online Savings | 3.75% | 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 | 1.60% | Bonus rate 2.65% for the first four months when you open your first NAB iSaver account |
| NAB Reward Saver | 4.25% | make at least one deposit on or before the second last banking day of the month and no withdrawals during the month |
| RAMS Saver Account | 1.40% | On balances to $500,000. Minimum $200 deposit each month with no withdrawals, balance between $200 - $500,000 for the month |
| Suncorp Growth Saver | 4.45% | Minimum $200 deposit each month and no more than 1 withdrawal |
| ubank Save Account | 4.60% | On a combined balance of up to $250,000. Minimum $200 deposit each month into Spend or Save accounts. |
| Up Savers Account | 3.85% | 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 | 4.25% | 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. |