Summary: Cash rate expectations over next 12 months move higher; cash rate now expected to average 4.316% 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 has some chance of rising above the current rate of 4.34% in the short-term, with an average of 4.395% expected through August, 4.425% in September, 4.47% in November and 4.455% in February 2025. May 2025 contracts implied 4.365%, slightly above 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.
ANZ-Indeed’s latest Job Ads survey was released at the start of the week. Total job advertisements posted a 2.2% fall in June and was 17.6% lower than in June 2023.
The Melbourne Institute’s June reading of its Inflation Gauge was also published. The index increased by 0.2% over the month and by 3.2% over the year, up from 3.1%.
The RBA released the minutes of its June Board meeting on Tuesday afternoon. There was nothing particularly new in them, except to say the economy was evolving broadly in line with the RBA’s expectations.
May dwelling approval numbers came out midweek. Total approvals by number rose by 5.5% over the month but were 8.5% lower over the past year. Approvals for houses and apartments both increased.
May’s preliminary retail sales report was published at the same time and it indicated retail spending had increased by 0.6% compared to the previous month. Sales were only up 1.7% on a 12-month basis, noticeably below the inflation rate.
Preliminary goods trade figures for May were released on Thursday. They indicated Australia’s trade surplus in goods decreased from $6.0 billion after revisions in April to $5.8 billion. Good exports increased 2.8% to $44.0 billion and imports increased by 3.9% to $38.2 billion.
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3-month BBSW is a useful benchmark for cash rates and it finished the week 1bp higher at 4.46%. The RBA’s target for the overnight lending rate between banks is 4.35% but actual overnight interbank loans are being negotiated at 4.34%, 1bp below the target but 8bps 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 | 5.20% | On a combined balance of up to $250,000. Minimum $500 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. |