ANZ cuts deposit rates to all-time low
By Shane Wright
January 23, 2020 — 10.58am
One of the nation's biggest lenders, ANZ, has cut a key deposit interest rate to just 0.05 per cent as markets prepare for the Reserve Bank to take the official cost of cash to an all-time low.
ANZ cut its base rate on its online saver account from 0.1 per cent to the new rate of 0.05 per cent on Thursday, the lowest deposit rate from any of the big four banks. Inflation is currently 1.7 per cent.
It has retained its promotional introduction rate of 1.5 per cent on the product.
The ANZ has cut its online deposit rate to a fresh low of 0.05 per cent, prompting speculation the commercial banks are expecting a cut in official interest rates. Credit:Gabriele Charotte
Apart from cutting its day-to-day deposit rate, the ANZ has also cut the majority of its term deposits by between 0.05 percertange points and 0.1 percentage points. Its best rate is 1.15 per cent on a standard five-year term deposit.
The move comes ahead of the Reserve Bank board's February 4 meeting.
Financial markets put the chance of an interest rate cut at that meeting at almost 60 per cent. The same markets believe there is a one-in-three chance the cash rate will be at 0.25 per cent by the end of the year.
Expectations of a rate cut increased on Wednesday after Westpac's measure of consumer confidence fell through January, while NAB's measure of cashless sales suggested a drop in retail activity in December.
Canstar finance expert Steve Mickenbecker said ANZ was now inching towards a zero interest rate scenario.
"ANZ isn't waiting for the Reserve Bank's February decision, but is cutting savings rates now with the Reserve Bank meeting a week and a half away," he said.
"Negative rates could even be looming if the RBA cuts rates again over the coming months."
Mr Mickenbecker said with ANZ retaining its three-month promotional rate of 1.5 per cent, savers would have to move their money around providers every quarter to get close to a "reasonable" rate of return.
"Savers are becoming accustomed to low interest rates as attractive rates have been consigned to history, but it is important to earn a little more while interest rates up around 2 per cent can still be hunted down," he said.
NAB has the highest base rate of the big four at 0.11 per cent on its iSaver account, while the Commonwealth Bank and Westpac are offering 0.1 per cent.
ANZ Bank
Shane Wright – Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.Connect via Twitter or email.