Summary: Cash rate expectations slightly higher than previous week; cash rate now expected to average 3.60% in November 2023; 3-month BBSW up 5bps; two changes to surveyed ADI cash rates.
Expectations moved this week in a manner which suggested the cash rate will be slightly higher through the remainder of 2022 and 2023 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 3.06% to average 3.175% in February, increase to an average of 3.445% in May and then to an average of 3.60% in August. November 2023 contracts also implied 3.60%, up from 3.585% 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 November reading of its Inflation Gauge was released at the very start of the week. The index jumped by 1.0% over the month and the annual rate accelerated from 5.2% to 5.9%.
The RBA announced another 25bps increase to its cash rate target and the rate paid on exchange settlement balances the next day, as largely expected.
Midweek, September quarter GDP figures came in slightly under expectations at 0.6% for the quarter and 5.9% for the year. Increased household consumption and exports were the main drivers, while increased imports were the main drag.
Preliminary trade figures for October were released on Thursday. They indicated Australia’s trade surplus declined from $12.4 billion after revisions in September to $12.2 billion. Exports fell by 0.9% to $60.1 billion while imports fell by 0.7% to $47.9 billion.
3-month BBSW is a useful benchmark for cash rates and it finished the week 5bps higher at 3.11%. The RBA’s target for the overnight lending rate between banks is 3.10% but actual overnight interbank loans are still being negotiated at 3.06%, 4bps below the target but 6bps above the RBA’s exchange settlement account (ESA) rate for ADI deposits with it.
There were two changes made by deposit-taking institution in our survey of cash account interest rates this week. Bank of Queensland raised its Bonus Interest Savings Account rate by 40bps while MeBank increased its MeBank Online Savings Account rate by 25bps. The average rate across the 22 accounts rose from 2.22% to 2.25%.
CASH ACCOUNTS
| Product | Interest Rate p.a. | Special Conditions |
|---|---|---|
| AMP Saver Account | 3.60% | Min. monthly $250 dep. Limit $250,000. |
| ANZ Premium | 0.05% | $10,000 - $499,999 |
| ANZ Progress Saver | 2.25% | 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 | 1.50% | On balances up to $500,000.99 with no withdrawals in that month |
| BOQ Fast Track Saver | 2.25% | For savers over 36 years old. On balances up to $250,000. |
| 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 | 1.35% | $1 or more |
| CBA Goal Saver Account | 2.70% | Balance at end of month must exceed balance at start of month. |
| Great Southern Bank | 2.80% | |
| Heritage Online Saver | 2.30% | |
| ING Savings Accelerator | 2.95% | $150,000 and over |
| Macquarie CMA | 1.75% | |
| ME Online Savings | 3.25% | On balances up to $250,000. Make at least four "tap & go" purchases per month. |
| NAB iSaver | 1.10% | current standard variable interest rate |
| NAB Reward Saver | 2.75% | 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 | 3.15% | Minimum $200 deposit each month and no more than 1 withdrawal |
| ubank Save Account | 3.85% | On a combined balance of upto $250,000. Minimum $200 deposit each month into Spend or Save accounts. |
| Up Savers Account | 3.10% | Make 5 successful purchases using your Up or 2Up debit card or digital wallets in a month. |
| Westpac eSaver | 0.85% | |
| Westpac Reward Saver | 3.50% | Make a deposit to the account and ensure account balance is higher at the end of the month than the beginning. |