The accepted wisdom that a lower cash rate is good for borrowers but bad for savers was challenged yesterday, when Commonwealth Bank announced it would raise interest rates paid on some savings accounts.

Predictably, the bank passed on 80 per cent of the rate cut to variable home loan customers, cutting interest rates by 20 basis points (0.20 percentage points) to 5.45 per cent.

Its decision to pass on 100 per cent of the saving (25 basis points) on small residential property-backed business loans was likewise in line with expectations.

• RBA cuts cash rate to new record low
• ANZ to cut home loan rates
• Traders cut the Reserve Bank with its pants down

However, its decision to raise its eight-month term deposit by 55 basis points and its GoalSaver by five basis points (both to 3.05 per cent) was far from predictable.

Matt Comyn, group executive retail banking, said of the decision: “Lifting the rates for our deposit customers at a time when the cash rate is decreasing recognises the importance of savings income, particularly for retirees and young people.

“As the nation’s leading home loan provider, today’s reduced mortgage rate is the best we have ever offered, and continues our commitment of providing value to our 1.6 million home loan customers,” Mr Comyn said.

The lift in the GoalSaver rate by five basis points will be partly offset by the bank’s decision to only pass on 20 of the 25 basis point cash rate cut.

However, it can also be explained by the possibility that the bank had already priced yesterday’s rate cut into its deposit rates.

Before CommBank’s surprise announcement, ME Bank’s general manager of markets John Caelli told The New Daily he didn’t think deposit rates were going to fall “too much further”.

“I think the market had already fully priced in this rate cut, and potentially one more,” he said. CommBank’s decision corroborate this view.

The bank’s decision also sheds some light on why the dollar defied expectations and shot up following Tuesday’s rate cut.

As The New Daily reported on Tuesday, the dollar’s rise may reflect a change in mood among currency traders from a short-term to a long-term outlook, as the RBA made no mention that it was considering cutting rates again.

CommBank’s decision to raise some deposit rates may signify that it is also confident there will be no rate cuts in the foreseeable future.

According to finder.com.au, ANZ, ING Direct, loans.com.au, ME Bank and The Mutual are the only other lenders to have announced they will pass on the the rate cut to customers.