Interest Rate Update (July 2021)

The following graph shows movements in both the 6 month and 3 year Bank Bill yield rates, for the period January 2018 to date.

These rates are wholesale rates which are net of any margin charged by financial institutions. It is not uncommon for retail premiums for 3 year fixed rates, to be 0.30% pa or 30 basis points above the wholesale premium.

Currently the 6 month wholesale Bill rate is 0.05% pa and the 3 year wholesale Bill rate is 0.47% pa, a premium of 0.37% pa or 37 basis points for the longer term.  

The sharp increase in the 3 year Bill rate is due to government stimulus and the strength of Australia’s economic recovery, leading to bankers and economists predicting interest rates will rise to prevent excessive inflation.

However given the current uncertainty and volatility in the global and domestic economy, it is particularly difficult to predict what rates may do in the medium to long term.