- Commonwealth Bank has cut its six-month term deposit rates by at least one percentage point
- It sends a signal the bank is comfortable with its forecast there will not be another cash rate increase in 2026
- The Reserve Bank of Australia meets to consider the cash rate next week
Australia's biggest bank has dropped up to 1.05% p.a. from the range of its six-month term deposit rates, taking its best new rate to 3.50% p.a. for a deposit of $50,000 to $5 million.
That applies to end-of-term and semi-annual interest payments, with the rate dropping as low as 3.40% p.a. for lower deposit amounts and monthly interest, as follows:
| Term | New rate (% change) | Deposit amount | Interest paid |
| 6 months | 3.45% p.a. (-1.05) | $5,000 - under $50,000 | End of term |
| 3.45% p.a. (-1.05) | $5,000 - under $50,000 | Semi-annually | |
| 3.40% p.a. (-1.05) | $5,000 - under $50,000 | Monthly | |
| 3.50% p.a. (-1.00) | $50,000 - $5m | End of term | |
| 3.50% p.a. (-1.00) | $50,000 - $5m | Semi-annually | |
| 3.45% p.a. (-1.00) | $50,000 - $5m | Monthly |
The new rates are a substantial shortfall (up to -1.95%) on the market's leading six-month rate of 5.35% p.a., currently offered by Heartland Bank and MOVE Bank.
While big banks aren't generally renowned for their high term deposit interest rates, the latest drop puts CommBank well off the pace in the six-month stakes.
All in the timing
The hefty cuts are a sign CommBank is comfortable there won't be another rise in the Reserve Bank cash rate in the near term.
The bank's economists have been forecasting a period of extended hold for the cash rate for some time.
After the release of key quarterly inflation data in late July, CommBank economists reiterated their forecast the cash rate would remain on hold after the RBA's meeting next week and for the remainder of 2026.
Markets are in broad agreement with CBA's August cash rate call, pricing in a 3% chance of an increase next week.
That's well down from the the odds of 43% on 24 July on the back of robust jobs market figures.
Term deposit market movement
Term deposit rates have been on the move as banks position their interest rates for the anticipated economic climate.
See also: Macquarie nudges new digital term deposit rates lower
But not all rate settings necessarily align with expected cash rate movements.
Some banks are also raising select term deposit rates in a bid to attract funds as activity in the home loan market plummets nationwide.
With banks looking to protect their margins as new lending dries up, some may choose to employ higher deposit rates to keep funds coming in the door.
This includes term deposit and savings account rates.
See also: Savings account interest rate cracks 6%
While most banks have nudged deposit rates lower so far this financial year, some have taken the opportunity to launch specials, particularly for shorter terms.
This week, IMB Bank upped its three-month term deposit to a 5.00% p.a. special rate - a 40-basis point jump on the old rate.
The most competitive rates on the market for terms six months or less are considerably above the 5% benchmark.
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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.
| Bank | Term Deposit | Interest Rate | Interest Frequency | Term | Automatic Rollover | Maturity Alert | Early Withdrawal Available | Minimum Deposit | Maximum Deposit | Notice Period to Withdraw | Account Keeping Fee | Online Application | Joint Application | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.35% p.a. | At Maturity | 6 months | $5,000 | $19,999 | – | – | |||||||||||||
5.20% p.a. | At Maturity | 6 months | $10,000 | $5,000,000 | – | – | |||||||||||||
5.15% p.a. | At Maturity | 6 months | $1,000 | $1,000,000 | – | – |
