by Sophia Rodrigues
Bank of New Zealand made a 10-basis-point hike in its 18-month deposit rate to 5.40% for amounts over $10,000. However, the move was just a catch-up to similar rates already being offered by the other big banks. The rate of 5.40% is now the top rate offered by banks for an 18-month term.
Another rate action came from Credit Union Baywide which raised its five-month deposit rate to 5.40%, up by 40 basis points. The increase is a bit surprising because the institution is now offering much above others for that term. The hike follows CBS Canterbury's 25-basis-point increase the week before but that increase only took its rate to 5% and was on par with Baywide then.
BNZ and Kiwibank are the only two others who are offering a rate close to Baywide - 5.15% - but for minimum amounts of $10,000 and $5,000 respectively.
The week ahead may see some reductions in deposit rates as interest rates edge lower after the RBNZ emphasised that pace and extent of further increases in the cash rate will be more moderate than projected in the June statement. The view was reflected in the RBNZ's paring down of the projection of the 90-day bank bill rate to a peak of 4.7% in March 2013 from 6.1% earlier.
However, with the term deposit rate market expected to remain highly competitive as banks aim to increase the share of term deposits on their books, it remains to be seen how much decreases we will see in the weeks ahead.
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