Will the RBA cut interest rates in December?

The RBA’s final meeting of 2019 is only a few days away, and while there’s been some chatter about a potential cut, markets are fairly confident that the cash rate will be kept on hold in December, leaving February as the more likely date.
“The RBA observed that their June-July double act caused a bit of consumer stress. I think they’d be reluctant to risk upsetting the apple cart in the lead-up to Christmas,” said Mozo’s banking expert, Peter Marshall.
How is the economy faring?
While the wheels haven’t exactly come off, things aren’t running too smoothly either. Since the RBA began cutting interest rates back in June, it’s had to contend with seesawing employment figures and an inflation rate that remains anchored well below its target range of 2-3%.
At the same time, household debt has reached record highs, and with RBA Deputy Governor, Guy Debelle recently talking down the prospect of a lift in wages, many Australian households are finding themselves in an increasingly vulnerable position.
All this very nearly led the RBA to break with its usual wait-and-see approach this month, with minutes from its last meeting revealing the board seriously considered bringing official interest rates down to 0.50% in November.
How low will interest rates go?
With the cash rate currently sitting at 0.75%, the RBA has three more cuts in the chamber before it hits the zero mark. But the chances that it will drop even further are extremely slim.
At a recent Australian Business Economists event in Sydney, RBA Governor Lowe left no doubt about his position on negative interest rates, stressing that while several countries around the world have adopted the unconventional policy, Australia is unlikely to follow suit.
“It has become increasingly apparent that negative rates create strains in parts of the banking system that can impair the ability of some banks to provide credit,” he said.
“In addition, there is evidence that they can encourage households to save more and spend less, especially when people are concerned about the possibility of lower income in retirement.”
Surprisingly, Dr Lowe revealed he isn’t particularly eager to resort to quantitative easing either, ruling it out as a possibility until interest rates reach at least 0.25%, and even then limiting its scope to the purchase of government securities rather than private assets.
"There may come a point where QE could help promote our collective welfare, but we are not at that point and I don't expect us to get there," he said.
What will banks do when the RBA does cut?
So if the RBA is likely to lower official interest rates early next year, how can we expect banks to respond?
“I think it will be pretty similar to the changes we saw in the last cut, where somewhere around half of the 25 basis point cut will get passed onto borrowers, and probably about the same for depositors,” said Marshall.
“Deposit rates are so low that banks are struggling to attract deposit funds now. They need to make sure that they are getting new deposits in the door to make up for the funds that they’re losing.”
So while it’s a bit hard to get excited about savings accounts at the moment, there are still a few options out there that offer rates of at least 2.00%. To help you find one that’s right for you, head over to our savings accounts comparison page, or have a quick browse of the selection below.
Savings account comparisons on Mozo
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Hi Saver
4.75% p.a. (for $0 and over)
0.25% p.a.(for $0 and over)
Yes up to $250,000
Bonus rate for the first 4 months from account opening
Earn bonus interest on your savings for the first four months from the date you open the account, even if you make withdrawals. Transfer or make payments using our mobile app or internet banking. No minimum balance required. Rest easy knowing total deposits up to $250,000 are protected by the Financial Claims Scheme.
CompareCompareHi Saver
Earn bonus interest on your savings for the first four months from the date you open the account, even if you make withdrawals. Transfer or make payments using our mobile app or internet banking. No minimum balance required. Rest easy knowing total deposits up to $250,000 are protected by the Financial Claims Scheme.
- Maximum rate
- 4.75% p.a. (for $0 and over)
- standard interest rate
- 0.25% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Bonus rate for the first 4 months from account opening
- Access
- BPay, Branch access, Internet banking
- Minimum balance
- $0.00
- Other restrictions
- -
Read reviews and learn more about P&N Bank savings accounts
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Bonus Saver
4.75% p.a. (for $0 and over)
0.25% p.a.(for $0 and over)
Yes up to $250,000
Bonus interest for the first four months from the account opened date. No minimum balance required. No monthly or ongoing fees or withdrawal penalties. Manage your money easily via phone or online banking or via the BCU Bank app.
CompareCompareBonus Saver
Bonus interest for the first four months from the account opened date. No minimum balance required. No monthly or ongoing fees or withdrawal penalties. Manage your money easily via phone or online banking or via the BCU Bank app.
- Maximum rate
- 4.75% p.a. (for $0 and over)
- standard interest rate
- 0.25% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Bonus rate for the first 4 months from account opening.
- Access
- BPay, Branch access, Internet banking
- Minimum balance
- $0.00
- Other restrictions
- -
Read reviews and learn more about BCU Bank savings accounts
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Savings+Bonus
4.75% p.a. (for $1 to $250,000)
2.00% p.a.(for $1 to $250,000)
Yes up to $250,000
Minimum $100 monthly deposit and no withdrawals to earn bonus interest each month.
Enjoy bonus interest when you deposit $100 or more per month and make no withdrawals. Access your money at any time via internet banking or our mobile app. Maximum balance $250,000 to receive bonus interest.
CompareCompareSavings+Bonus
Enjoy bonus interest when you deposit $100 or more per month and make no withdrawals. Access your money at any time via internet banking or our mobile app. Maximum balance $250,000 to receive bonus interest.
- Maximum rate
- 4.75% p.a. (for $1 to $250,000)
- standard interest rate
- 2.00% p.a.(for $1 to $250,000)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $5.00
- Maximum rate conditions
- Minimum $100 monthly deposit and no withdrawals to earn bonus interest each month.
- Access
- -
- Minimum balance
- $1.00
- Other restrictions
- Must become a First Option Bank member to open an account.
Read reviews and learn more about First Option Bank savings accounts
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Savings Maximiser
5.40% p.a. (for $0 to $100,000)
0.05% p.a.(for $0 and over)
Yes up to $250,000
Deposit $1,000 into a personal ING account, make 5 eligible transactions with a linked Orange Everyday account and grow the balance each month.
Access a great variable rate when you grow your balance each month, in addition to other eligibility criteria. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^
CompareCompareSavings Maximiser
Access a great variable rate when you grow your balance each month, in addition to other eligibility criteria. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^
- Maximum rate
- 5.40% p.a. (for $0 to $100,000)
- standard interest rate
- 0.05% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- For customers who deposit $1000 from an external source into a personal ING account (excluding Orange One and Living Super), make 5 eligible transactions and grow their nominated Savings Maximiser account each month so there is more in the account at the end of the month than there was at the start of each month (excluding interest). The total bonus interest rate is available on balances up to $100,000 on one Savings Maximiser the next month after meeting eligibility.
- Access
- Phone banking, Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Must be linked to an Orange Everyday transaction account to receive the bonus rate. Where multiple Savings Maximiser Accounts are held, the bonus rate is only applied to one nominated account.
Read reviews and learn more about ING savings accounts
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Bonus Saver Account
4.75% p.a. (for $0 to $500,000)
0.05% p.a.(for $0 and over)
Yes up to $250,000
Deposit at least $20 each month and make 5 Visa Debit transactions with a linked Glide account.
Open a Bonus Saver Account in under 5 minutes. There are no fees to pay or penalties for withdrawing money. Get a seamless personalised insights and online statements via the My State Bank app.
CompareCompareBonus Saver Account
Open a Bonus Saver Account in under 5 minutes. There are no fees to pay or penalties for withdrawing money. Get a seamless personalised insights and online statements via the My State Bank app.
- Maximum rate
- 4.75% p.a. (for $0 to $500,000)
- standard interest rate
- 0.05% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Bonus rate when at least $20 is deposited each month and five Visa Debit transactions are made each month using linked Glide transaction account.
- Access
- Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Must link to a transaction account
Read reviews and learn more about MyState Bank savings accounts
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^See information about the Mozo Experts Choice Savings Account Awards
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