Summary: Cash rate expectations over next 12 months move higher; cash rate now expected to average 4.215% in May 2025; 3-month BBSW up 1bp; no changes to surveyed ADI cash rates.
Expectations moved this week in a manner which suggested the path of the cash rate over the next twelve months will be higher 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 remain reasonably close to the current rate of 4.32% and average 4.315% through June and July and 4.345% in August. However, November contracts implied 4.36%, February 2025 contracts implied 4.31% while May 2025 contracts implied 4.215%, 10bps less than the current rate.
Since March 2020, the RBA has not enforced its cash rate target by completely draining excess liquidity from the banking system. As a result, the actual cash rate has been several basis points below the target rate. Contract prices reflect expectations of the average actual cash rate in a given month, not the target rate, although the former is obviously related to the latter.
April’s preliminary retail sales report was published on Tuesday and it indicated retail spending had increased by just 0.1% compared to the previous month and by 1.3% on a 12-month basis.
Westpac and the Melbourne Institute released the April reading of their leading index the next day. The annualised growth rate of the index increased to a level which implies trend GDP growth in the near-term.
The ABS’ monthly CPI report was also released. The CPI rose by 3.6% over the year to April, up from 3.4% in March. However, the trimmed-mean measure sped up from 4.0% to 4.1%.
The March quarter report on construction work done came out midweek. Work done decreased by 2.9%, in contrast with the modest gain generally expected.
April dwelling approval numbers came the next day. Total approvals by number slipped 0.3% over the month but were 3.5% higher over the past year. Approvals for houses decreased while apartment approvals increased.
March quarter capital expenditure figures were also released, with rises of 1.0% over the quarter and 5.5% compared to the March 2023 quarter. The latest capex estimate (Estimate 6) for 2023/24 financial year was $180.6 billion, 2.5% higher than Estimate 5.
Total private credit came out at the end of the week. Private credit increased by 0.5% in April, slightly above expectations while the annual growth rate remained steady at 5.2% after revisions.
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3-month BBSW is a useful benchmark for cash rates and it finished the week 1bp higher at 4.35%. The RBA’s target for the overnight lending rate between banks is 4.35% but actual overnight interbank loans are being negotiated at 4.32%, 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 | 5.40% | Min. monthly $1,000 dep. Limit $250,000. |
| ANZ Premium | 0.05% | $10,000 - $499,999 |
| ANZ Progress Saver | 4.25% | 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 | 2.45% | On balances up to $500,000.99 with no withdrawals in that month |
| BOQ Fast Track Saver | 2.75% | $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 | 2.75% | Bonus interest is paid into your account when you limit your withdrawals to a maximum of one per month |
| CBA NetBank Saver | 2.35% | 2.40% p.a. fixed bonus margin for the first 5 months on your first NetBank Saver |
| CBA Goal Saver Account | 4.90% | At least 1 deposit required; balance at end of month must exceed balance at start of month. |
| Great Southern Bank | 4.20% | No bonus conditions |
| Heritage Online Saver | 3.45% | $1 or more, bonus intro rate 1.45% (promotional 4 month rate on new accounts up to $100,000) |
| ING Savings Accelerator | 4.70% | $150,000 and over |
| Macquarie CMA | 2.75% | Minimum $5,000 |
| ME Online Savings | 4.25% | 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 | 2.00% | Bonus rate 2.65% for the first four months when you open your first NAB iSaver account |
| NAB Reward Saver | 5.00% | make at least one deposit on or before the second last banking day of the month and no withdrawals during the month |
| Rabobank PremiumSaver | 5.45% | On balances to $250,000. Balance increased by $200 a month. |
| RAMS Saver Account | 1.40% | On balances to $500,000. Minimum $200 deposit each month with no withdrawals. |
| Suncorp Growth Saver | 5.05% | Minimum $200 deposit each month and no more than 1 withdrawal |
| ubank Save Account | 5.10% | On a combined balance of up to $250,000. Minimum $200 deposit each month into Spend or Save accounts. |
| Up Savers Account | 4.35% | 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 | 5.00% | 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. |