Summary: Cash rate expectations lower than previous week; cash rate now expected to average 3.54% in August 2023; 3-month BBSW down 5bps; two changes to surveyed ADI cash rates.
Expectations moved this week in a manner which suggested the cash rate will be lower 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 2.81% to average 2.96% in December, increase to an average of 3.105% in February and then to an average of 3.385% in May. August 2023 contracts implied 3.54%, down from 3.84% 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.
October’s preliminary retail sales report was released at the start of the week and it indicated retail spending had declined by 0.2% over the month, in contrast with market expectations of a 0.5% rise. Sales increased by 12.5% over the year, down from 17.9% in September.
October’s private credit report was published Wednesday and it indicated total lending had increased by 0.6% over the month, in line with expectations. The annual growth rate sped up from 9.4% to 9.5%.
The September quarter report on construction work done was released the same morning. Work done increased by 2.2%, basically in line with expectations.
October dwelling approval numbers also came out and they fell again, this time by 6.0% and by more than expected. Approval for houses and apartments both fell.
Capital expenditure figures for the September quarter were released on Thursday. Capex slipped by 0.6% over the quarter but was still up by 1.8% over the year to September.
October home loan approval numbers were released at the end of the week. Total approvals fell by 4.1% over the month and by 21.0% over the year to October.
3-month BBSW is a useful benchmark for cash rates and it finished the week 5bps lower at 3.06%. The RBA’s target for the overnight lending rate between banks is 2.85% but actual overnight interbank loans are still being negotiated at 2.81%, 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. ubank raised its Save Account rate by 25bps, as did Up Bank with its Saver Account rate. The average rate across the 22 accounts rose from 2.20% to 2.22%.
CASH ACCOUNTS
| Product | Interest Rate p.a. | Special Conditions |
|---|---|---|
| AMP Saver Account | 3.60% | Minimum monthly $250 deposit. Limit $250,000. |
| ANZ Premium | 0.05% | $10,000 - $499,999 |
| ANZ Progress Saver | 2.25% | Minimum (single) $10 deposit each month with no withdrawals. |
| 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% | Minimum monthly balance of $5000. 0.05% base rate. |
| BoQ Bonus Interest Savings | 1.60% | Maximum 1 withdrawal per month. 0.05% base rate. |
| CBA NetBank Saver | 1.35% | |
| CBA Goal Saver Account | 2.70% | Deposits must exceed withdrawals for bonus interest.0.15% base rate. |
| Great Southern Bank | 2.80% | No maximum balance |
| Heritage Online Saver | 2.30% | |
| ING Savings Accelerator | 2.95% | On balances over $150,000 |
| Macquarie CMA | 1.75% | |
| ME Online Savings | 3.00% | On balances up to $250,000. Make at least four "tap & go" purchases per month. |
| NAB iSaver | 1.10% | |
| NAB Reward Saver | 2.75% | At least 1 deposit and no withdrawals in month |
| RAMS Saver Account | 1.40% | On balances to $500,000. Minimum $200 deposit each month with no withdrawals |
| Suncorp Growth Saver | 3.15% | No more than 1 withdrawal and balance must increase by $200 in month. |
| 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 purchases using Up or 2Up debit card or digital wallets in a month. |
| Westpac eSaver | 0.85% | |
| Westpac Reward Saver | 3.50% | At least 1 deposit and deposits must exceed withdrawals for 2.15% bonus interest |