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Term deposit rates in Australia have been grinding lower all of this year and with rate cuts now being priced back into the market from June 2015 to early 2016, TD rates are coming under further pressure. Indeed, in recent weeks Alliance Bernstein said, “We could easily see a couple of rate cuts” and did not rule out a cash rate of around 2.0% by the end of 2015, from the current 2.5%. While no one has a crystal ball, the market believes that an imminent rate hike is unlikely but the likelihood is that rates will go down rather than up.
The chart below shows the trend in the best TD rates from the big four banks over the past 12 months.
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