The Reserve Bank (RBA) released the full explanation of its emergency monetary policy meeting on Tuesday, outlining why it cut the cash rate for a second time in a month for the first time ever, to a new record low 0.25%.

The Minutes of the Monetary Policy Meeting (RBA Minutes) noted the cash rate had been cut by 125 basis points in the last year and had been successful in boosting the cash flow of businesses and households. 

Given the economic climate amid the COVID-19 pandemic, the central bank said the cash rate would not be increased until progress towards full employment was made and inflation sat between 2-3%. 

The Board also agreed that the cuts had negative consequences on those without a home loan and savers trying to earn interest, and as such, it would not decrease the rate any further. 

"Members also agreed that the cash rate was now at its effective lower bound," it said.

"Members had no appetite for negative interest rates in Australia." 

The table below displays a snapshot of some of the highest introductory savings account interest rates on the market. 

Update resultsUpdate
BankSavings AccountBase Interest Rate Max Interest Rate Total Interest Earned Introductory Term Minimum Amount Maximum Amount Minimum Monthly Deposit Minimum Opening Deposit ATM Access Joint Application TagsFeaturesLinkCompare
4.40% p.a.
5.75% p.a.
Intro rate for 4 months
then 4.40% p.a.
$533
4 months
$0
$250,000
$0
$0
Featured
  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance
0.50% p.a.
Bonus rate of 4.75%
Conditions apply.
5.25% p.a.
$531
$1
$100,000
$2,000
$1
  • $0 monthly account fee
  • Dip into your savings without losing your bonus interest
0.10% p.a.
Bonus rate of 5.00%
Conditions apply.
5.10% p.a.
$515
$0
$250,000
$200
$0
No monthly fees
  • Download the App to open your account
  • Get better visibility of your spending within App!
  • Deposit $200 per month to activate bonus interest
4.75% p.a.
5.35% p.a.
Intro rate for 4 months
then 4.75% p.a.
$518
4 months
$0
$249,999
$0
$0
Featured
  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties
0.55% p.a.
Bonus rate of 5.00%
Conditions apply.
5.55% p.a.
$561
$0
$100,000
$2,000
$0
0.10% p.a.
Bonus rate of 5.40%
Conditions apply.
5.50% p.a.
$556
$1
$25,000
$200
$1
0.05% p.a.
Bonus rate of 5.45%
Conditions apply.
5.50% p.a.
$556
$0
$50,000
$1,000
$0
For customers aged 14-35 years
0.50% p.a.
Bonus rate of 4.85%
Conditions apply.
5.35% p.a.
$541
$1
$50,000
$500
$1
  • Maximum Age - 24
0.05% p.a.
Bonus rate of 5.30%
Conditions apply.
5.35% p.a.
$541
$0
$250,000
$1,000
$0
0.30% p.a.
Bonus rate of 4.95%
Conditions apply.
5.25% p.a.
$531
$0
$100,000
$$formattedMinMonthlyDep.format("%,d",$!{product.minimumMonthlyDeposit})
$1
0.01% p.a.
Bonus rate of 5.24%
Conditions apply.
5.25% p.a.
$531
$0
$99,999
$100
$0
Bonus rate of 5.25%
Conditions apply.
5.25% p.a.
$531
$0
$1,000,000
$20
$1
More savings accounts
Important Information and Comparison Rate Warning

All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of . View disclaimer.

The RBA said given the unprecedented nature of the coronavirus outbreak, it could not accurately forecast how the economy would suffer in Q2 and Q3 of 2020.

"While it was not possible to provide an updated set of forecasts for the economy given the fluidity of the situation, it was likely that Australia would experience a very material contraction in economic activity, which would spread across the March and June quarters and potentially longer," it said.

"The size of the fall in economic activity would depend on the extent of the social distancing requirements, and potential lockdowns, put in place to contain the virus." 

Since the Board met, the Government has enacted strict social distancing rules, restricting public gatherings of people to no more than two.

The RBA said job losses were expected to be significant in the coming months, but some sectors would see some positive job growth. 

"There were likely to be significant job losses over the months ahead, although the extent of this would depend on the capacity of businesses to retain employees during this period.

"At the same time, some industries were employing more workers, particularly those involved in the retail supply chain and delivering goods."

The central bank said although the economy would recover, the timing of this was uncertain. 

Update resultsUpdate
BankTerm DepositInterest Rate Interest Frequency Term Automatic Rollover Maturity Alert Early Withdrawal Available Minimum Deposit Maximum Deposit Notice Period to Withdraw Online Application Joint Application TagsFeaturesLinkCompare
5.00% p.a.
At Maturity
6 months
$5,000
$5,000,000
Featured
  • Easy online application
  • Interest can be paid to other institutions
  • Maturity alert by email and phone
4.95% p.a.
At Maturity, Annually
6 months
$5,000
$1,000,000
  • Guaranteed rate of return
  • Manage your term deposit online
  • Choose your own term - Options range from one month to five years
5.00% p.a.
Annually, Semi-Annually, At Maturity, Monthly
6 months
$5,000
$99,999,999
5.00% p.a.
At Maturity
6 months
$25,000
$99,999
4.90% p.a.
At Maturity, Annually
6 months
$5,000
$2,000,000
31 days
4.90% p.a.
Annually, At Maturity
6 months
$5,000
$999,999
31 days
4.90% p.a.
Annually, At Maturity
6 months
$250,000
$1,000,000
31 days
4.85% p.a.
At Maturity, Annually
6 months
$1,000
$1,000,000
31 days
4.85% p.a.
Annually, At Maturity
6 months
$1,000
$2,000,000
31 days
4.85% p.a.
Annually, At Maturity, Monthly
6 months
$10,000
$99,999,999
31 days
4.85% p.a.
Annually, At Maturity
6 months
$10,000
$5,000,000
31 days
5.00% p.a.
Annually, At Maturity
6 months
$5,000
$5,000,000
7 days
More term deposits
Important Information and Comparison Rate Warning

All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of . View disclaimer.

The motivations for quantitative easing 

Quantitative easing, also known as QE, is the process by which the RBA uses its cash reserves (aka printing money) to buy government bonds. 

The central bank implemented QE for the first time in Australia's history in March, and the reason for doing so gives an insight as to how long the cash rate may stay unchanged for. 

The RBA said it was purchasing three-year Australian Government bonds of around 0.25%. 

"The specific proposal was to target the rate at the three-year mark, given its importance as a benchmark rate in financial markets and its role in funding across much of the Australian economy," the Board said.

"Such a target would also be consistent with the expectation that the cash rate would remain at a very low level for several years."

In a statement following the announcement of QE, RBA chair Philip Lowe said the bank was not technically implementing QE, but something slightly different, which the minutes also cited. 

"Members noted that, although the program of bond purchases would entail an increase in the size of the Bank's balance sheet, the focus of the program would be on bond yields rather than the quantity and timing of bond purchases.

"The objective of this component of the proposed policy measures would be to add to the downward pressure on funding costs for financial institutions, households and businesses." 

Looking for a place to store cash? Below are a handful of six month term deposits with some of the highest interest rates on the market.





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