Summary: Cash rate expectations over next 12 months move higher; cash rate now expected to average 3.655% in February 2026; 3-month BBSW down 2bps; 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. Even so, contracts at the end of the week implied the cash rate is expected to be cut next month, with at least one more 25bp cut expected by February 2026. Contracts implied an average of 4.275% in February, 4.015% in May and 3.80% in August. November contracts implied 3.69% while February 2026 contracts implied 3.655%, 68bps below the current rate.
The RBA did not enforce its cash rate target by completely draining excess liquidity from the banking system between March 2020 and mid-2024. As a result, the actual cash rate has been several basis points below the target rate until recently. 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.
The Melbourne Institute’s December reading of its Inflation Gauge was released at the start of the week. The index increased by 0.6% over the month to be up 2.6% over the year, down from 2.9% in November.
The results of the ANZ-Indeed latest Job Ads survey was published the same morning. Advertisements rose by 0.3% in December and are at quite a robust level.
The Westpac-Melbourne Institute’s December reading of their consumer sentiment index was released on Tuesday. The index declined in January after a couple of months of rises and is at a level which is noticeably lower than the long-term average.
December’s Labour Force report was released on Thursday. Total employment increased by considerably more than expected but the jobless rate still managed to tick up as the participation rate returned to the series’ high.
The Melbourne Institute’s January survey of consumer Inflation expectations also came out that same day. Consumers expect an inflation rate of 4.0% over the coming 12 months on average, down from 4.2% in December.
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3-month BBSW is a useful benchmark for cash rates and it finished the week 2bps lower at 4.33%. 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 and 9bps 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.
| 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 | 4.10% | 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 | 4.35% | On balances of $250,000 to $499,999 |
| Bankwest Hero Saver | 4.60% | On balances up to $250,000.99 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 | 5.45% | 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 | 4.30% | 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 | 5.35% | 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 | 5.00% | 5.5% on first $100,000, 5.0% on next $150,000; applies only on amounts upto $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. |