Summary: Cash rate expectations lower; cash rate now expected to average 3.44% in February 2024; 3-month BBSW down 4bps; no changes to surveyed ADI cash rates.
Expectations moved this week in a manner which suggested the cash rate will be lower 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 current rate of 3.07% to average 3.21% in February, increase to an average of 3.445% in May and then to an average of 3.53% in August. February 2024 contracts implied 3.44%, down from 3.655% a week ago.
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 noticeably below the target rate. As such, contract prices only reflect expectations of the average actual cash rate in a given month and not the implied likelihood of the RBA changing its target.
The Melbourne Institute’s December reading of its Inflation Gauge was released at the very start of the week. The index increased by 0.2% over the month while the annual rate remained steady at 5.9%.
The Westpac-Melbourne Institute’s January reading of their consumer sentiment index was released the next day. The latest reading of the index increased for a second consecutive month but it is significantly lower than the long-term average.
December’s Labour Force report was released on Thursday. Employment growth was negative and thus less than expected, although the jobless rate remained unchanged after revisions. The participation rate fell back but remained close to its all-time high.
3-month BBSW is a useful benchmark for cash rates and it finished the week 4bps lower at 3.27%. The RBA’s target for the overnight lending rate between banks is 3.10% but actual overnight interbank loans are still being negotiated at 3.07%, 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 deposit-taking institutions in our survey of cash account interest rates this week.
CASH ACCOUNTS
| Product | Interest Rate p.a. | Notes |
|---|---|---|
| AMP Saver Account | 4.10% | Min. monthly $250 dep. Limit $250,000. |
| ANZ Premium | 0.05% | $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, over part the Base Rate of 0.05% p.a. applies |
| BoQ Bonus Interest Savings | 2.00% | Bonus interest is paid into your account when you limit your withdrawals to a maximum of one per month |
| CBA NetBank Saver | 1.60% | $1 or more, 2.15% p.a. fixed bonus margin for the first 5 months on your first NetBank Saver |
| CBA Goal Saver Account | 3.25% | Balance at end of month must exceed balance at start of month. |
| Great Southern Bank | 3.20% | No bonus conditions |
| Heritage Online Saver | 2.55% | $1 or more, bonus intro rate 1.45% (promotional 4 month rate on new accounts up to $100,000) |
| ING Savings Accelerator | 3.20% | $150,000 and over |
| Macquarie CMA | 2.00% | No bonus conditions |
| ME Online Savings | 3.25% | On balances up to $250,000. Make at least four "tap & go" purchases per month. |
| NAB iSaver | 1.10% | Bonus rate 2.65% for the first four months when you open your first NAB iSaver account |
| 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, balance between $200 - $500,000 for the month |
| Suncorp Growth Saver | 3.70% | Minimum $200 deposit each month and no more than 1 withdrawal |
| ubank Save Account | 4.10% | Rate applies since 1 January 2023. On a combined balance of upto $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% | 3.75% p.a. for the first 5 months for new Westpac eSaver customers |
| 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. |