NAB reduces rates on some savings accounts just three months after last cut

NAB reduces savings rates, as analysts speculate whether the RBA will cut the cash rate in February.

NAB has slashed interest rates on some savings accounts again. Picture: Hollie Adams

NAB has slashed its interest rates on some savings accounts, as speculation grows that the Reserve Bank of Australia might cut the cash rate at its first 2020 board meeting in February.

NAB sliced interest rates for the same customers just three months ago, and RateCity chief executive Paul Marshall said the move was “disappointing”.

“NAB will stir the market with today’s decision to cut rates when the cash rate hasn’t budged,” Mr Marshall said.

“It’s a disappointing move from NAB to drop savings rates out of cycle, especially since the bank cut rates on these accounts by a quarter of a per cent in October.”

The first board meeting of the RBA is scheduled for 4 February and the market is currently pricing in around a 50 per cent chance of a rate cut in February, rising to more than 60 per cent in March. The cash rate is at a record low 0.75 per cent.

The damage wrought by unprecedented bushfires has ratcheted up the chance of another cut in the official interest rate by the RBA as soon as next month, according to UBS economist George Tharenou. If it were to eventuate, it would be the fourth official interest rate cut within 12 months.

Savers hit

Australia’s third-largest bank on Thursday said it would cut its iSaver account rate by 0.15 per cent to a maximum introductory rate of 1.55 per cent for four months and the maximum rate on NAB’s Reward Saver would drop by 0.11 per cent to 1.50 per cent, if all conditions were met.

Mr Marshall said these latest cuts would be “a bitter pill to swallow” for savers.

“Many will be left wondering why they’ve had to endure yet another cut when rates were already close to zero,” Mr Marshall said.

“Regular savers who strive for those maximum returns by meeting all the conditions will be the ones most impacted by these cuts, losing 0.11 per cent ongoing interest. Ardent savers can find competitive rates if they are willing to look beyond the big banks,” he said.

Data provided by RateCity indicated that currently, Westpac’s eSaver offered the best return of the big four banks on savings accounts, with a maximum return of 1.66 per cent over five months, including an introductory offer.

Of the big four conditional savings accounts based on balances of less than $50,000, Westpac’s Life savings account had the highest return, with a maximum rate of 1.65 per cent, according to RateCity.