On April 15, 2025, ANZ bank announced significant reductions to its term deposit interest rates, aligning itself with other major banks in Australia. This move signals a broader trend as the banking sector braces for anticipated interest rate cuts from the Reserve Bank of Australia (RBA) next month.
ANZ's cuts affect nearly all short- to medium-term deposits, with the most substantial decrease of 25 basis points applied to its 8-month term deposit. This brings the interest rate down from a previously competitive 4.50% to 4.25%. Other terms, including the 6-month and 12-month deposits, saw a reduction of 10 basis points, now offering 3.30% and 3.90%, respectively.
Rachel Wastell, a personal finance expert at Mozo, commented on the situation, stating, "ANZ has officially completed the set - with all Big Four Banks now cutting term deposit rates ahead of the next RBA meeting. The signal is loud and clear, the banks are bracing for a rate cut in May." This collective action among the Big Four banks—ANZ, Commonwealth Bank, Westpac, and NAB—highlights a strategic response to changing economic conditions.
The RBA has been under pressure to adjust interest rates as the Australian economy grapples with various challenges, including the impacts of U.S. tariffs. Earlier this month, ANZ revised its cash rate forecast, moving the expected timing for the next rate cut to May 2025, with additional cuts projected for July and August. NAB is predicting a substantial 0.50% cut in May, although ANZ's senior economist, Adelaide Timbrell, expressed caution about the likelihood of such a significant decrease, stating, "It's unlikely that we would see much risk for a 50 basis point cut between now and May."
This trend of declining term deposit rates is particularly concerning for savers. Wastell noted that term deposit rates have been on a downward trajectory since the RBA began its rate-cutting cycle in February 2025. Last week alone, Commonwealth Bank reduced its term deposit rates by up to 0.30%, while NAB cut rates by as much as 1%, and Westpac lowered its 11-month rate by 0.30%.
"Last year on the Mozo database, there were a number of leading term deposit rates starting with 5, but now these leading rates start with 4 and are falling fast," Wastell explained. This shift indicates a significant change in the savings landscape, as savers may find themselves receiving lower returns on their investments.
As the term deposit rates tumble, experts are advising savers to remain vigilant. Wastell emphasized the importance of comparing rates before allowing term deposits to roll over. With rates fluctuating, it’s crucial for consumers to ensure they are getting the best possible return on their savings.
At present, the rates among Australia’s Big Four banks for various term deposits are closely aligned. For instance, the current offerings are as follows: for a 3-month term, ANZ and Commonwealth Bank both offer 3.00%, while NAB leads slightly with 3.10% and Westpac trails at 2.85%. For 6-month terms, ANZ offers 3.30%, Commonwealth Bank 3.35%, NAB 3.50%, and Westpac 3.40%. The 12-month rates show ANZ at 3.90%, Commonwealth Bank at 3.80%, NAB at 4.00%, and Westpac at 3.75%.
Despite the recent cuts, the banks are still competing closely on shorter-term deposits, indicating that they are keen to attract savers looking for ultra-short length options. While short-term deposit rates remained unchanged in ANZ's latest adjustments, the bank is likely positioning itself for a competitive edge in this segment.
As the market anticipates further movements from the RBA, consumers are left to ponder how these changes will affect their financial strategies. While lower interest rates can provide relief for mortgage holders, they pose challenges for savers who rely on interest income. The delicate balance of the economy means that every decision made by the RBA and the banks will have far-reaching implications.
In light of these developments, Australians are encouraged to stay informed about the latest banking news and interest rate changes. For those considering investing or saving, platforms like Mozo offer valuable resources to help consumers navigate the evolving financial landscape.
As the situation unfolds, it remains to be seen how the other major term deposit providers will respond to ANZ's cuts. The likelihood of similar adjustments from competitors suggests that the banking sector is bracing for a significant shift in the coming months.
In summary, the recent cuts to term deposit rates by ANZ and other major banks reflect a cautious approach to anticipated changes in the interest rate environment. With the RBA's next meeting on the horizon, consumers can expect further developments that may shape their financial futures.
