Summary: Cash rate expectations higher; cash rate now expected to average 3.965% in February 2024; 3-month BBSW up 13bps; one change 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 half of 2024 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 rise from the now current rate of 3.32% to average 3.495% in March, increase to an average of 3.905% in May and then to an average of 4.135% in August. February 2024 contracts implied 3.96%, up from 3.455% a week ago.
The Melbourne Institute’s January reading of its Inflation Gauge was released at the very start of the week. The index increased by 0.9% over the month and the annual rate accelerated from 5.9% to 6.4%.
Preliminary trade figures for December were released on Tuesday. They indicated Australia’s trade surplus decreased from $13.5 billion after revisions in November to $12.2 billion. Exports fell by 1.4% to $57.8 billion while imports fell by 1.0% to $45.6 billion.
That afternoon, the RBA announced another 25bps increase to its cash rate target and the rate paid on exchange settlement balances, as expected. However, the accompanying statement contained some changes which were largely interpreted as a display of the RBA’s concern
At the end of the week, the February Statement on Monetary Policy provided an update to the RBA’s various forecasts for GDP growth, inflation and unemployment rates. Forecast GDP growth rates were largely unchanged but 2023 underlying CPI rate forecasts were raised again. Unemployment rate forecasts were unchanged.
3-month BBSW is a useful benchmark for cash rates and it finished the week 13bps higher at 3.47%. The RBA’s target for the overnight lending rate between banks is 3.35% but actual overnight interbank loans are still being negotiated at 3.32%, 3bps below the target but 7bps above the RBA’s exchange settlement account (ESA) rate for ADI deposits with it.
There was one change made by a deposit-taking institutions in our survey of cash account interest rates this week. Commonwealth Bank raised the rate on its Goal Saver Account by 75bps.
CASH ACCOUNTS
| Product | Interest Rate p.a. | Notes |
|---|---|---|
| AMP Saver Account | 4.10% | Minimum monthly $1000 deposit. On balances up to $250,000. |
| ANZ Premium | 0.05% | On balances of $10,000 - $499,999 |
| ANZ Progress Saver | 2.50% | 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 | 1.50% | On balances up to $500,000.99 with no withdrawals in that month |
| BOQ Fast Track Saver | 2.25% | $1000 minimum monthly deposit. On balances up to $250,000. Base rate of 0.05%. |
| BoQ Bonus Interest Savings | 2.00% | Maximum 1 withdrawal per month. 0.05% base rate. |
| CBA NetBank Saver | 1.60% | |
| CBA Goal Saver Account | 4.00% | At least 1 deposit required; balance at end of month must exceed balance at start of month (excluding interest). |
| Great Southern Bank | 3.20% | |
| Heritage Online Saver | 2.55% | |
| ING Savings Accelerator | 3.20% | $150,000 and over |
| Macquarie CMA | 2.00% | |
| ME Online Savings | 3.25% | On balances up to $250,000. Make at least four "tap & go" purchases per month. |
| NAB iSaver | 1.10% | |
| NAB Reward Saver | 3.25% | 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. |
| Suncorp Growth Saver | 4.00% | Minimum $200 deposit each month and no more than 1 withdrawal |
| ubank Save Account | 4.10% | On a combined balance of up to $250,000. Minimum $200 deposit each month into Spend or Save accounts. |
| Up Savers Account | 3.35% | Make 5 successful purchases using your Up or 2Up debit card or digital wallets in a month. |
| Westpac eSaver | 0.85% | |
| Westpac Reward Saver | 3.75% | Make a deposit to the account and ensure account balance is higher at the end of the month than the beginning. |