Wednesday's inflation results - 1% over the quarter, 3.8% over the year - were strong, but expected. This then led to a butterfly effect.
Many analysts said 1.1% quarterly price growth would be too tough for the RBA to ignore, but CBA economist Stephen Wu said 1% puts us in a 'grey zone' - and we got just that.
Because the rate came in-line with RBA forecasts, there is seemingly little chance the board hikes at next week's meeting, seemingly content to rest on its laurels with a mid-2026 midpoint inflation timeline.
This is to keep the plane on its 'narrow landing' path - tight enough to slowly bring down inflation, yet not fast enough to tank the jobs market and the economy further.
Never mind this is the second consecutive quarter of 1% growth, and that our latest survey indicates people are doing it tough off the back of price rises already.
So what does this mean for term deposits?
There wasn't too much TD activity in July; our database indicates 13 providers adjusted their term deposit rates.
Notably, long-term deposits in the 4-year and 5-year terms saw average rate increases of up to 10 bps each. The highest average rate is in the 1-year space at 4.50% p.a., beating inflation by 70bps.
Our latest survey indicates term deposits were the single most popular way to save money for just 6.6% of Aussies, jumping to 13% of Baby Boomers.
Judo Bank takes 15bps sword to popular products
| Term | New rate % p.a. |
| 6 Months | 5.10% |
| 9 Months | 5.10% |
| 12 Months | 5.10% |
| 2 Years | 4.85% |
| 3 Years | 4.85% |
| 4 Years | 4.85% |
| 5 Years | 4.85% |
Popular term deposit provider Judo made a uniform 15 basis point cut across its products this week.
The above rates are for interest paid at maturity, with slight reductions in the rate for more frequent payments.
Deposit sizes are anywhere from $1,000 to $2 million.
Previously, the bank's chief economic adviser Warren Hogan made headlines when he said the RBA needs to hike two to three more times this year to really put a lid on inflation.
After the latest inflation figures, he walked away from that call somewhat, but said the central bank still needs to do more or risk runaway inflation again.
Inflation at 3.8% on RBA forecast but core a touch higher at 3.9%. Market we’re looking for a smoking gun on core inflation above 1% in the quarter to trigger a hike. The implication is that because it came in at 0.0843% the case for a hike has disappeared. If only it were that…
— Warren Hogan (@_warrenhogan) July 31, 2024
ING - a new market leader in the 11-month space?
| Term | % Rate p.a. (Change) |
| 90 Days | 4.85% (-0.05) |
| 330 Days (11 Months) | 5.20% (+0.60) |
| 12 Months | 5.05% (-0.05) |
| 2 Years | 4.75% (+0.15) |
We don't usually talk about 11 month terms, and nor do many banks offer them, but for 330 days you can get one of the highest rates on offer across all terms at ING.
Australia's sixth-largest bank in terms of customer deposits this week made the big 60 basis point change, out of step with its other movements.
The rates above are for interest paid at maturity, with deposit sizes from $10,000 to $5 million.
Other movements
- BCU Bank varied rates on 4- and 5-month terms by up to 160bps
- BankVic boosted rates on its 12-month products by 15bps
- Regional Australia Bank boosted rates on 6-month products by 15bps
Photo by Ludomil Sawicki on Unsplash
