Summary: Cash rate expectations for 2024 lower; cash rate now expected to average 4.05% in November 2024; 3-month BBSW down 3bps; no changes to surveyed ADI cash rates.
Expectations moved this week in a manner which suggested the path of the cash rate will be lower over the next eighteen months 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 close to the current rate of 4.32% and average 4.31% through January and 4.335% in February. May 2024 contracts implied a cash rate of 4.27%, 5bps below the current cash rate, while November 2024 contracts implied 4.05%, down from 4.26% 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 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.
Monday was a busy day.
ANZ-Indeed’s latest Job Ads survey was released and total job advertisements recorded a third consecutive month of losses in November, falling by 4.6%. The index was still 16.8% lower than in November 2022.
The Melbourne Institute’s November reading of its Inflation Gauge produced a 0.3% increase over the month while the annual rate slowed from 5.1% to 4.4%.
October home loan approval numbers indicated total approvals excluding refinancing increased by 5.6% over the month and were 4.9% higher over the twelve months to October.
The RBA announced no change to its cash rate target and the rate paid on exchange settlement balances on Tuesday afternoon, as expected.
Midweek, September quarter GDP figures rose by 0.2%, less than expected. Imports and changes to inventories were the main drivers of the result.
Preliminary goods trade figures for October were released the next day. They indicated Australia’s trade surplus in goods increased from $6.2 billion after revisions in September to $7.1 billion. Good exports rose by 0.4% to $45.5 billion while imports fell by 1.9% to $38.4 billion.
3-month BBSW is a useful benchmark for cash rates and it finished the week 3bps lower at 4.34%. 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 rate 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 | 5.20% | 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 | 3.00% | 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 | 5.10% | 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. |