While most economists are tentatively saying the RBA won't need to raise rates again, it's not at all inconceivable that it might, and any rate cuts look a long way off.
In the RBA's latest statement of monetary policy (SOMP), it read "Inflation is forecast to decline to around 3.5% by the end of 2024 and to reach a little below 3% at the end of 2025".
The phrasing of "a little below" is a slight turn away from its previous forecasts and goal of reaching the midpoint of the 2-3% band by that time, implying the RBA may not comfortably hit its goal until some time in 2026.
However in his appearance on the Savings Tip Jar podcast, Judo Bank's economic adviser Warren Hogan said the RBA won't want to miss its targets - rather, it risks having to increase rates dramatically in 2024.
"[This risk is] having to raise rates four or five times, which would do a lot of damage," Mr Hogan said.
"It's less of a risk that they push the inflation target, than they just lose their patience and jack up rates a lot."
Mortgage holders across the country will be once again bracing themselves for their repayments to go up, but investors will be salivating at increased fixed income returns.
In the aftermath of Tuesday's monetary policy decision, two banks have already upped term deposit rates to draw level with the market leaders for one year terms.
Yesterday, ING announced its one year term deposit product will have its rates upped to 5.30% p.a next week, which will be the highest available rate in Australia once it kicks in.
Some investors have justifiable scepticism about the relatively low returns from term deposits with inflation so high, but it's likely to keep moderating in the coming months (albeit not as fast as Michele Bullock and the RBA would like), making TDs potentially more worthwhile.
The RBA expects CPI inflation to be around 3.5% by the end of 2024, so someone who locks in a term deposit well above 5% in the coming weeks will hopefully find an inflation-beating product at long last.
Westpac and its subsidiaries increase rates by 25 basis points
Westpac was the first of the big four banks to up term deposit rates after the cash rate movement, hiking up rates on its special offer.
This is available for a limited time on TDs opened or renewed by existing Westpac customers, with a term length between 12 and 23 months.
On top of the new 5% p.a rate, there's also a 0.10% p.a bonus rate available for customers who open or renew online.
These terms are the same at Westpac's subsidiaries such as St George, Bank of Melbourne and BankSA, where rates were also upped by the same amount.
| Bank | Deposit size | Payment frequency | Interest rate (Percentage point change) |
| Westpac | $5,000-$5,000,000 | Annually/Monthly | 5.00% p.a (+0.25) |
| St George | $1,000-$5,000,000 | Annually/Semi annually/Monthly | 5.00% p.a (+0.25) |
| Bank SA | $1,000-$5,000,000 | Annually/Semi annually/Monthly | 5.00% p.a (+0.25) |
| Bank of Melbourne | $1,000-$5,000,000 | Annually/Semi annually/Monthly | 5.00% p.a (+0.25) |
This is the first time one of the big four have cracked the 5% mark for one year term deposits, although CommBank offers 5% on its two year special offer term deposit.
Firstmac/Goldfields Money increase rates up to 55 basis points
| Term length | Deposit size | Payment frequency | Interest rate (Percentage point change) |
| Two months | $5,000-$5,000,000 | End of term | 4.55% p.a (+0.55) |
| Three months | $5,000-$5,000,000 | End of term | 4.85% p.a (+0.15) |
| Six months | $5,000-$5,000,000 | End of term | 5.05% p.a (+0.10) |
| One year | $5,000-$5,000,000 | End of term | 5.05% p.a (+0.10) |
| Two years | $5,000-$5,000,000 | End of term | 4.50% p.a (+0.50) |
Firstmac upped rates for the second week in a row.
While still a long way off its previous heights of 5.40% p.a for six month and one year terms, Firstmac is now back among the providers where some rates start with a 5.
Community First hikes special offer rate by 25 basis points
| Term length | Deposit size | Payment frequency | Interest rate (Percentage point change) |
| One year | $50,000-$1,000,000 | End of term | 5.25% p.a (+0.25) |
Community First passed on the RBA rate increase in full to its special offer term deposit, drawing it level with the market leading rate (until ING up to 5.30% next week).
This is another product only available to new customers, and with a limited allocation.
Community First also increased rates on its normal term deposit products this week, by as much as 125 basis points, but these rates are considerably lower than this special offer.
For reference, 4.60% p.a is the highest available rate for one year terms, so if you want to invest with Community First, securing one of these special offer spots could be the way to go.
Judo Bank increases rates up to 20 basis points
| Term length | Deposit size | Payment frequency | Interest rate (Percentage point change) |
| Three months | $1,000-$999,999 | End of term | 4.80% p.a (+0.15) |
| Six months | $1,000-$999,999 | End of term | 5.05% p.a (+0.15) |
| Nine months | $1,000-$999,999 | End of term | 5.10% p.a (+0.20) |
| One year | $1,000-$999,999 | End of term | 5.25% p.a (+0.20) |
| Two-Five years | $1,000-$999,999 | End of term | 5.25% p.a (+0.15) |
Fan favourite Judo was quick to move after the rate hike, reestablishing itself among the market leaders.
A 5.25% p.a rate on one year term deposits is level with Bank of Sydney and AMP, although once again, if any of these banks want to keep a market leading rate, further upward movement will be needed after ING goes to 5.30% p.a on 14 November.
Judo also offers strong returns on terms of multiple years, with 5.25% p.a also available on terms from two to five years.
Locking in a five year term deposit on 5.25% p.a would guarantee fixed income until the end of 2028, which provided inflation continues to moderate and there are RBA rate cuts on the horizon, is likely an attractive proposition for risk averse investors.
AMP increases rates up to 35 basis points
| Term length | Deposit size | Payment frequency | Interest rate (Percentage point change) |
| Three months | $25,000-$4,999,999 | End of term | 4.75% p.a (+0.05) |
| Nine months | $25,000-$4,999,999 | End of term | 5.05% p.a (+0.15) |
| Two years | $5,000-$24,999 | End of term | 5.20% p.a (+0.35) |
| Two years | $25,000-$4,999,999 | End of term | 5.25% p.a (+0.35) |
Moving on Monday, before the RBA decision, AMP hiked rates on various term deposit products.
There's a comprehensive range of products on offer, but the headline increase was to its two year terms, which saw 35 basis point hikes to move to a maximum rate of 5.25% p.a, level with Judo.
AMP term deposit products are available with a 5bps discount for semi annual payments, 10bps for quarterly and 20bps for monthly interest payments.
Other movers
- Community First increases rates on its standard TDs by 125 basis points
- Australian Military Bank increases rates up to 15 bps.
- G&C Mutual cuts rates up to 25 bps.
- MOVE Bank varies rates up to 30 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.
Denise Raward
Harry O'Sullivan
