Summary: Cash rate expectations over next 12 months move higher; cash rate now expected to average 3.53% in August 2025; 3-month BBSW down 3bps; one change 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 is expected to remain reasonably close to the current rate in the short-term, with an average of 4.335% expected through October and 4.30% in November. However, February 2025 contracts implied 4.12%, May 2025 contracts implied 3.765% while August 2025 contracts implied 3.53%, 81bps 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.
August private credit and June retail sales were released at the start of the week. Total private credit increased by 0.5%, in line with expectations, while the annual growth rate remained steady at 5.7%.
August retail spending figures came out the next day. Sales increased by 0.7% over the month and by 3.1% on a 12-month basis, or a rate which is still below the inflation rate.
August dwelling approval numbers were released at the same time. Total approvals in August by number fell by 6.1% over the month but were up by 3.6% over the past year. Approvals for houses were up while apartment approvals fell substantially.
Preliminary goods trade figures for August were released on Thursday. They indicated Australia’s trade surplus in goods remained unchanged at $5.6 billion after revisions in August. Good exports and goods imports both declined by 0.2% to $43.2 billion and $37.6 billion respectively.
August home loan approval numbers were released at the end of the week. Total approvals excluding refinancing increased by 1.0% in dollar terms over the month and by 23.0% over the year. The number of loan commitments to owner-occupiers declined by 1.0%.
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3-month BBSW is a useful benchmark for cash rates and it finished the week 3bps lower at 4.41%. 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 was one change made by a deposit-taking institution in our survey of cash account interest rates this week. Rabobank reduced its PremiumSaver rate by 10bps.
| 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 | 4.25% | 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 | 4.35% | 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 | 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. |