Two of Australia’s Big Four banks have hiked interest rates on term deposits in recent days. The upward moves come amid growing speculation the Reserve Bank of Australia (RBA) has reached the end of its rate-cutting cycle.
Commonwealth Bank increased rates by 0.20 per cent on various terms, with its one-year special offer rate now 4 per cent. NAB followed suit and has upped rates by 0.30 per cent on its one-year term to 4 per cent, while dropping rates by 0.70 per cent on its shorter seven and eight-month terms to 3.10 per cent.
Canstar spokesperson Laine Gordon told Yahoo Finance there had been 11 banks hiking at least one term deposit rate in the past week, while four have cut.
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“It’s notable to see two of the Big Four banks hike a term deposit rate within a week of each other, but even at a rate starting with a ‘4’, let’s be clear, these rates are still a way off the market leaders,” she said.
“CBA’s new rate starting with a ‘4’ is a short-term special designed to grab attention, while NAB’s move from a 7-month special to a 12-month one suggests it’s keen to lock customers in for longer.”
Gordon said the hikes were less about rewarding savers and more about getting new customers through the door, as household deposits sit at a record high of $1.64 trillion.
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“The term deposit market is a constant game of snakes and ladders. Rates rise and fall as banks tweak their specials to manage funding costs and outdo the competition,” she explained.
“These latest moves reflect a market adjusting to the expectation that the RBA may stay on hold at least until early next year.”
Commonwealth Bank economists believe the rate-cutting cycle is now over and the RBA will remain on hold for the “foreseeable future”.
NAB economists expect the RBA to be firmly on hold before a final rate cut in May 2026, but it has noted “risks are skewed” to the current 3.6 per cent being the terminal rate for the cycle.
Following the board’s decision to hold in November, RBA governor Michele Bullock said “anything’s possible” when it comes to the direction of the next interest rate decision, noting the board did not have an easing bias.
The highest term deposit rate is currently 4.40 per cent from Australian Military Bank for six months and Judo Bank for eight months, according to Canstar.