The August monetary policy decision was an unsurprising one - for the sixth time in a row, the RBA kept the cash rate at 4.35%.
Despite what many interpreted as a hawkish tone to the accompanying statement, the response from the term deposit market was several substantial cuts.
It's another blow for term deposit fans still reeling from the blow that came last week when Heartland Bank cut its market leading one year TD rate back to 5.30% p.a.
However, term deposit bears should also bear in mind the RBA's revised timeline for inflation, pushing back the date by another six months once again.
It now does not forecast inflation to be within earshot of the midpoint of its 2-3% target until end-2026, potentially even 2027.
After Tuesday's decision, Westpac Chief Economist Luci Ellis changed her prediction for rate cuts, saying she now does not expect the cash rate to be cut in 2024.
"[On Tuesday] the RBA Governor all but ruled out cutting rates this year," she said.
If you're totally convinced that the only way is down for TDs, for now there's still 5.30% p.a. available for both six month and one year terms with Heartland Bank.
Macquarie cuts rates up to 25 bps
| Term length | Deposit size | Payment frequency | Interest rate (Change) |
|---|---|---|---|
| Three months | $5,000-$1,000,000 | End of term | 4.85% p.a. (-0.10) |
| Six months | $5,000-$1,000,000 | End of term | 4.75% p.a. (-0.10) |
| Nine months | $5,000-$1,000,000 | End of term | 4.70% p.a. (-0.25) |
| One year | $5,000-$1,000,000 | End of term | 4.85% p.a. (-0.25) |
| Two years | $5,000-$1,000,000 | Annually | 4.10% p.a. (-0.25) |
After a couple of increases in July, Macquarie briefly was level with ING with the top one year term deposit rate of Australia's ten biggest banks by customer deposits (5.10%).
This week though, Macquarie wound back, cutting this rate by 25 bps back down to 4.85% p.a.
This may not necessarily have been a direct response to the cash rate decision - there have been several examples over the past few months of banks putting up a strong rate for a couple of weeks then dialling it back.
It's possible enough Aussies rushed to lock in that 5.10% p.a. while it was available for Macquarie to now be content with a lesser rate, which presumably means less demand.
Bank of Sydney cuts rates up to 45 bps
| Term length | Deposit size | Payment frequency | Interest rate (Change) |
|---|---|---|---|
| Three months | $1,000-$1,000,000 | End of term | 4.45% p.a. (-0.45) |
| Six months (Online only) | $1,000-$1,000,000 | End of term | 5.10% p.a. (-0.05) |
Bank of Sydney also trimmed rates on three and six month TDs in the aftermath of Tuesday's RBA decision.
For three months, Bank of Sydney is now 55 bps behind Heartland Bank and Judo, while it is 0.20% away from Heartland for six months.
That six month rate is only available online - if you want to sign up in branch you'll have to cop a rate of 4.75% p.a.
Bank of Queensland cuts Premier Investment rates up to 25 bps
| Term length | Deposit size | Payment frequency | Interest rate (Change) |
|---|---|---|---|
| Six months | $5,000-$250,000 | End of term | 5.00% p.a (-0.15) |
| Nine months | $5,000-$250,000 | End of term | 4.80% p.a (-0.25) |
| One year | $5,000-$250,000 | End of term | 4.80% p.a (-0.25) |
Other movers
- Great Southern Bank cut rates up to 15 bps
- ME cut rates up to 60 bps
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Want to earn a fixed interest rate on your cash? The table below features term deposits with some of the highest interest rates on the market for a six-month term.
Picture by Stoica Ionela on Unsplash
Harrison Astbury
William Jolly
