Savers beware: some analysts think that when interest rates fall, banks will try to cut rates on savings accounts by more than the RBA’s reductions.
While the sharemarket and media are abuzz with predictions of when interest rates will fall, there’s one very large group of people not sharing the excitement: savers.
First, interest rates on term deposits have plummeted, as banks have reacted to market bets the central bank will cut the cash rate in early 2025. RateCity says 40 banks cut term deposit rates last month, and the big four have all cut in recent weeks. To be fair, that’s how term deposits work – they’re priced off market expectations.
Morgan Stanley’s Richard Wiles said the recent Westpac change and the ANZ change to its online saver were “relatively minor” tweaks, but they showed the different “levers” available to banks. He said there could be an opportunity for deposit “repricing to support margins” when the Reserve Bank cuts rates.
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