Summary: Cash rate expectations for 2023, 2024 higher; cash rate now expected to average 4.395% in November 2024; 3-month BBSW up 4bps; no changes to surveyed ADI cash rates.
Expectations moved this week in a manner which suggested the path of the cash rate will be higher 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 rise from the current rate of 4.07% to average 4.28% through November, move up to 4.29% in December and then average 4.40% in February. May 2024 contracts implied a cash rate of 4.48%, 31bps above the current cash rate, while November 2024 contracts implied 4.395%, up from 4.375% 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.
September’s preliminary retail sales report was published at the start of the week and it indicated retail spending had risen by 0.9%, a larger rise than expected. Sales increased by 2.0% over the year, up from 1.6% in August.
August’s private credit report was released the next day. Total loans outstanding increased by 0.5% over the month, more than expected. The annual growth rate slowed from 5.2% in August to 4.9%.
September dwelling approval numbers were released Wednesday and they fell by 4.6% for the month and by 22.3% lower over the past year. Approvals for houses and apartments both fell.
The next day, September home loan approval numbers indicated total approvals excluding refinancing increased by 0.6% over the month but were 4.7% lower over the twelve months to September.
Preliminary trade figures for September were released. They indicated Australia’s trade surplus decreased from $10.2 billion after revisions in August to $6.8 billion. Exports fell by 1.4% to $45.6 billion while imports grew by 7.5% to $38.8 billion.
3-month BBSW is a useful benchmark for cash rates and it finished the week 4bps higher at 4.35%. The RBA’s target for the overnight lending rate between banks is 4.10% but actual overnight interbank loans are being negotiated at 4.07%, 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 | 5.00% | 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 | 2.20% | 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 | 2.20% | 2.40% p.a. fixed bonus margin for the first 5 months on your first NetBank Saver |
| CBA Goal Saver Account | 4.65% | 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 | 3.40% | $1 or more, bonus intro rate 1.45% (promotional 4 month rate on new accounts up to $100,000) |
| ING Savings Accelerator | 4.35% | $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 | 4.75% | make at least one deposit on or before the second last banking day of the month and no withdrawals during the month |
| Rabobank PremiumSaver | 4.85% | 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 | 4.85% | Minimum $200 deposit each month and no more than 1 withdrawal |
| ubank Save Account | 5.00% | 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 | 4.75% | 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. |