Summary: Cash rate expectations over next 12 months generally move lower; cash rate now expected to average 3.50% in August 2025; 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 generally lower in comparison with its expected path at the end of the previous week. Contracts at the end of the week implied the cash rate is expected to remain reasonably close to the current rate in the short-term, with an average of 4.33% expected through September and 4.305% in October. However, November contracts implied 4.24%, February 2025 contracts implied 4.03% and August 2025 contracts implied 3.50%, 84bps 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 RBA released the minutes of its August Board meeting on Tuesday. They indicated the Board remained concerned regarding the pace of inflation reduction and discussed the merits of a rate rise alongside the merits of no change .
Westpac and the Melbourne Institute released the July reading of their leading index the next day. The annualised growth rate of the index rose to a level which implies trend GDP growth in the near-term.
The S&P Global/Judo Bank flash August reading of their Australian PMI indices came out on Thursday. The composite index increased from 49.9 to 51.4, the services PMI increased from 50.4 to 52.2 while the manufacturing index increased from 47.5 to 48.7. “Business activity in Australia’s private sector returned to growth in August, underpinned by rising services activity.”
~~~~
3-month BBSW is a useful benchmark for cash rates and it finished the week 12bps lower at 4.35%. 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 | 5.40% | 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 (base rate + 2.70% p.a. bonus interest) equals 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 | Standard Variable Rate is 0.40%p.a Bonus Variable Interest 4.50% p.a. | To qualify, you must have a GoalSaver or NetBank Saver in your name only. The rates provided are current as of 17 November 2023 but may change at the Bank’s discretion. A single bonus interest rate applies to your entire balance, determined by your account balance. |
| Great Southern Bank | 4.20% | No bonus conditions |
| Heritage Online Saver | 3.45% | The interest rate is a flat 3.45% for balances of $1 or more, calculated daily and paid monthly. Additionally, a bonus introductory rate of 1.45% applies, for new members for 4 months, bringing the total rate to 4.90%. |
| 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% | Earn 5.00% p.a. (2.00% standard + 3.00% bonus) for the first four months on your first NAB iSaver, up to $20 million, if you haven't held one in the last 12 months. |
| NAB Reward Saver | 5.00% | You'll earn a base rate of 0.35% p.a., with a total rate of 5.00% p.a. if you deposit monthly and make no withdrawals to qualify for the 4.65% bonus rate. |
| 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% | 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. |