Finally! RBA slashes official
interest rate to 1.75%
Speculation about a potential rate drop in the lead up to this month’s RBA announcement has proved correct, as Reserve Bank interest rates were slashed to 1.75%.
Experts conjectured that turbulent market conditions at the start of the year, including uncertainty in the Australian property market - particularly in urban hubs Sydney and Melbourne - and misgivings about China’s economy, may have been cause enough for a rate cut. These factors, along with a drop in the Aussie dollar last week and economic deflation for the first time in seven years, prompted the RBA to agree.
In a statement, Governor Glenn Stevens said that, “Commodity prices have firmed noticeably from recent lows, but this follows very substantial declines over the past couple of years. Australia's terms of trade remain much lower than they had been in recent years."
Prior to the announcement, many experts had been in agreement that RBA interest rates would stay the same, with many citing the Federal Budget Announcement - scheduled for 7.30 pm - as one deciding factor, saying the Reserve Bank was unlikely to upstage the budget announcement.
Stevens said that the RBA board felt that "prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting."
Has your bank been naughty or nice?
While RBA interest rates being cut to a new low of 1.75% is great news for borrowers, experts have warned that some banks may play grinch and fail to pass on these savings to customers.
Our rate chasers will be on the case updating our naughty or nice table below to show you if your bank has been playing fair:
Check out all the other great deals available in our home loan comparison hub.
With the Reserve Bank interest rate dropping to an all time low, customers who want a great return on their money when investing in savings will need to be mindful of where they’re parking their stash. While savings accounts activity was pretty flat all round in the past month, we saw increases on introductory rates from several banks, including:
- Citibank Online Saver 4 month introductory rate increased by 25 bp to 3.40%
- Bank of Queensland WebSavings Account 4 month introductory rate increased by 25 bp to 3.25%
- ANZ Online Saver 3 month introductory rate increased by 5 bp to 3.15%
- Maitland Mutual Building Society Internet Saver introductory rate increased by 50 bp to 3.10%
You can also check out our savings account search tool to find the perfect place to stash your cash.
The real moneymaker this month turned out to be term deposits, with a strong rise in 2 year term rates, from an average of 2.78% in January, to a current average of 2.82% as well as rises at other short terms. While the average rates for term deposits haven’t reached massive highs, they have mainly risen since the beginning of this year.Top rates for a 2 year term:
- ME - 3.20% (7 months)
- Bank of Queensland - 3.15% (6 months)
- CUA - 3.15% (10 months)
- Arab Bank - 3.10% (4, 5, 6, or 9 months)
- Bank of Queensland - 3.10% (3 months)
- Maitland Mutual Building Society - 3.10% (9 months)
- Newcastle Permanent - 3.10% (9 months)
For more great term deposit deals, check out our comparison table, and for a regular dose of all things financial, subscribe to our monthly newsletter, the Mozo Banking Roundup.
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Read our last month Reserve Bank interest rates update