What exactly did the RBA decide?

• The RBA’s cash rate (the official rate banks reference) is currently 3.60 %, following a 0.25 percentage‐point cut in August 2025 from 3.85 %.

• The RBA statement says that underlying inflation is continuing to decline towards the midpoint of the 2-3 % target band and labour-market conditions are easing slightly — hence the Board considered “a further easing of monetary policy was appropriate”.

• At the same time, the RBA remains cautious, citing uncertainty around demand and supply in the economy, and said it is “well-placed” to respond if global developments affect Australia.

So the headline: interest rates have come down from their recent peaks, but the RBA is not proclaiming a dramatic free-fall in rates and remains vigilant.

Why depositors care: how the cash rate links to deposit / savings interest

• The cash rate set by the RBA is the key benchmark — it influences the cost of funds for banks, liquidity conditions, and more.

• Generally speaking: when the cash rate rises, banks face higher funding costs and tend to raise deposit rates to attract savers. When the cash rate is lowered, one might expect deposit/savings rates to follow lower (though often with a lag).

• But: deposit interest rates don’t move exactly one-for-one with the cash rate. Banks’ decisions on what to pay savers depend on many factors: competitive dynamics, liquidity, cost of other funding sources, risk appetite, and what borrowers pay.

Hence, for someone relying on interest income from cash deposits, the direction of the cash rate matters — but so does how quickly banks pass changes through, and whether the deposit rate falls faster or slower than the cash rate.

So: Is this recent RBA decision good news for depositors?

The short answer: not especially good news — at least not yet. It’s more mixed than outright positive. Below is a breakdown of why.

Pros (some reasons to be mildly hopeful)

1. The cash rate is still at historically elevated levels compared to the ultra‐low era (e.g., sub-1% rates at the pandemic’s worst). For savers, this still means there is some interest to be earned on term deposits and accounts.

2. The decision to cut (and not raise further) suggests the peak of the rate-hike cycle may be behind us. That should provide some stability for deposit rates, rather than rates rapidly dropping.

3. For depositors, if banks anticipate further cuts (as some forecasts suggest) they may hold off aggressively reducing deposit rates, so relative to expectations the environment could be “better than feared”.

Cons (many reasons for caution)

1. Deposit rates are already low and may fall further: Data show the average deposit interest rate (for term deposits) in Australia has fallen to around 2.70% as of September 2025. Trading Economics If inflation is say ~3%, that means real returns (after inflation) for depositors could be close to zero or negative.

2. While the RBA cut the cash rate, that typically leads to deposit rates dropping, not increasing — because banks pass on lower funding costs by paying less to depositors (though they may also reduce lending rates). A comment from NewsWire:

   “Even though the central bank has held interest rates steady … the big banks have been reducing interest rates on term deposits this year … We’re seeing term deposit rates go backwards … after inflation … savers are only gaining 0.05 % a year when accounting for inflation.”
   This suggests that depositors are under pressure.

3. The RBA cut cash rates to support demand and growth — which tends to help borrowers more than depositors (borrowers benefit from lower interest costs). For savers, this kind of policy means less reward for keeping money in cash.

4. Inflation remains a risk. Even though the RBA sees it moderating, if inflation remains stubborn, depositors face losing purchasing power because interest earned may not keep pace.

5. The degree to which banks pass on rate cuts to depositors is variable and often slower than for borrowers. There is also the risk that banks maintain margin for profitability rather than fully passing through.

What this means for savers who rely on cash deposit income

Given all of the above, here are some practical implications for Australians depending on deposit interest:

• Expect stability but maybe moderate returns: The environment is not one of rapidly rising deposit rates. The cash rate has already peaked and is now gently easing; deposit rates may follow.

• Real return risk: With inflation potentially higher than deposit rates, savers may see their real capital value or purchasing power decline. If you’re earning say 2.7% on a deposit but inflation is 3%, you’re losing ~0.3% in real terms.

• Shop around: Because deposit rates vary significantly by institution (term length, size, promotional offers), savers should look at the best term deposit or notice account rates. We saw reports of term deposit specials paying up to around 4.38% p.a. for certain terms.

• Consider term length and risk: Longer‐term deposits may lock in decent rates now (while they’re still elevated) but come with the risk of interest-rate drops during the term. If rates drop, you might be locked in at higher rates (which is good) — or you might miss out on changes.

• Balance liquidity and rate: If you rely on the income for living expenses, you’ll want to balance earning higher interest with needing access to cash. Fixed‐term deposits restrict access.

• Diversify mindset: While cash deposits provide safety and certainty, they may not be the best place for strong returns in this era. Consider if you have a broader portfolio (bonds, equities, property) consistent with your risk tolerances.

What to watch going forward

To better assess whether the deposit environment will improve or deteriorate, savers should monitor:

• Further RBA decisions: If the cash rate is cut further (many economists expect modest cuts in 2025–26) then deposit rates may also drop further.

• Inflation outcome: Whether inflation falls toward the RBA’s 2-3% target — if inflation stays high, then real returns remain negative.

• Banking sector competitive dynamics: If banks aggressively compete for deposits (for example, to fund growth or maintain liquidity), deposit rates might stay elevated for longer; conversely if banks feel well-funded they may not.

• Promotional vs standard rates: Many “term deposit specials” may give higher rates for certain durations or amounts; these are worth watching.

• Macro economic risks: Any shock (global, domestic) could change the rate outlook — either pushing the RBA to cut more or keep rates higher for longer; both affect deposit rates and inflation.

• Your personal tax/return scenario: Remember deposit interest is taxable (unless in certain tax‐advantaged structures), and after tax your effective return may be lower.

Final verdict

So, to answer the question: Is the RBA interest-rate decision good news for Australians relying on cash deposit interest?
Yes and no. It’s slightly good news in that the worst of rate cuts for depositors may be behind us and the cash rate remains relatively elevated, giving savers some income. But it is not particularly strong news — deposit rates are under pressure, real returns may be close to zero, and further cuts could dampen interest income further.

If I were to sum it up: this decision provides some relief (in the sense that depositors are not facing soaring negative outcomes), but it does not herald a windfall or a boom for savers. In fact, savers may need to be proactive: looking for best deals, accounting for inflation, and perhaps diversifying beyond simple cash deposits to protect real wealth.