Yahoo Finance CBA, ANZ, NAB make major move amid RBA interest rate cut speculation: 'Locked in'
Three of the big four banks have adjusted their term deposit rates and some believe this indicates the central bank could drop the official cash rate soon.
Three of Australia's Big Four banks have made a decision that some believe indicates the Reserve Bank of Australia (RBA) could cut interest rates this year. While RBA governor Michele Bullock warned Aussie homeowners not to expect any mortgage relief for the remainder of 2024, Commonwealth Bank (CBA), ANZ and NAB's movements suggest otherwise.
CBA has slashed its rates on all but one of its term deposit periods, with the 12-month rate falling by 60 basis points. NAB and ANZ have now followed this week, raising eyebrows that the RBA could be poised for a rate cut by December.
Canstar's director of data insights, Sally Tindall, believes banks are adjusting their numbers because they "don’t want to be locked in paying interest on term deposits at a rate that is ultimately unprofitable for them".
RELATED
Gen Z trend sparks fear among Aussie pub owners: 'Worst in 40 years'
Centrelink recipients warned over ‘bonus’ cost-of-living payment
CLSA analyst Ed Henning added that these rates will "continue to move" as the RBA drops interest rates.
“These things are dynamically priced, and they will continue to adjust them as rates shift and so does the demand for lending," he explained to the Australian Financial Review.
Traders believe there's an 89 per cent chance the RBA will deliver a 0.25 per cent rate cut by December.
Westpac is the only major bank that hasn't moved its term deposit rates.
The biggest term deposit return is 4.80 per cent per year and that kicks in at eight months at NAB and ANZ, nine months for CBA, and 11 months at Westpac.
For example, if you had $10,000 at a 4.80 per cent term deposit rate, you would be given $320 after eight months. That skyrockets to $32,000 in the same period if you had $1 million in the account.
Those returns are pre-tax, as money like that is considered taxable income in the eyes of the Australian Taxation Office.
Do you have a story? Email stew.perrie@yahooinc.com
What are CBA, ANZ and NAB's term deposit rate changes?
Below are the changes that Commonwealth Bank, ANZ and NAB have made in the past week with their term deposit rates:
Commonwealth Bank
3 Months: 3.20% p.a (-0.25)
6 Months: 3.45% p.a (-0.25)
9 Months: 4.50% p.a (+0.55)
12 Months: 4.00% p.a (-0.60)
2 Years: 3.80% p.a (-0.15)
3 Years: 3.55% p.a (-0.40)
4 Years: 3.55% p.a (-0.40)
5 Years: 3.55% p.a (-0.40)
NAB
3-4 Months: 3.25% p.a (-0.25)
6-7 Months: 3.60% p.a (-0.20)
8-9 Months: 4.80% p.a (+0.80)
12 Months: 4.50% p.a (-0.40)
3, 4 and 5 Years: 3.30% p.a (-0.50)
ANZ
3-4 Months: 3.25% p.a (-0.25)
6-7 Months: 3.50% p.a (-0.40)
8-9 Months: 4.80% p.a (+0.75)
12 Months: 4.50% p.a (-0.10)
What is the RBA doing with interest rates?
After the RBA's August meeting, Governor Bullock said inflation was still too high to warrant a rate cut.
She reiterated that stance at a recent parliamentary committee meeting, where she said predictions about a cut by Christmas were "premature".
“The board remains vigilant to upside risks to inflation. It is premature to be thinking about rate cuts," she explained.
“Circumstances may change, of course, and the outlook is uncertain. But based on what the board knows at present, it does not expect that it will be in a position to cut rates in the near term.”
CBA is the only one of the Big Four still pricing in a rate cut in 2024, with the bank's head of Australian economics, Gareth Aird, explaining that while the RBA's August meeting tone was more "hawkish" than normal, it hasn't scared them off completely.
“But given the RBA is highly data dependent it will ultimately be the data that determines the outlook for monetary policy,” he said.
“Recent events offshore, particularly in the US, highlight that the picture can change quite quickly if the data makes the case. And history shows that central banks can turn on a dime if outcomes deviate from their expectations (in either direction).”
CBA predicts a rate cut could come in November, NAB has pencilled in a May 2025 rate cut, ANZ and Westpac believe mortgage relief will come in February next year.
“Consistent with our earlier forecast, the trajectory of rate cuts is expected to be tentative and conservative, at one 25 basis point cut per quarter,” Westpac chief economist Luci Ellis said.
Get the latest Yahoo Finance news - follow us on Facebook, LinkedIn and Instagram.
