The National Australia Bank (NAB) has revised its forecast for a central bank interest rate cut, delaying its forecast from February to May 2025.
In a recent update, the NAB said that while inflation has shown signs of moderation, the Reserve Bank of Australia (RBA) is likely to remain cautious due to ongoing vulnerabilities, such as wage growth , volatility in the global economy and fluctuations in consumer spending.
“While “, the RBA will want to ensure a more stable base before considering rate cuts,” the bank wrote.
The other three “big four” banks – Westpac, Commonwealth and ANZ – are still planning to cut their rates in February. it is possible that there will be no reduction at all in 2025.
At the beginning of November, where rates are maintained for more than 12 months.
In a statement justifying its decision to leave the policy rate at the highest level since November 2011, the RBA said core inflation remained too high at 3.5 per cent in the September quarter.
“Reminder of the number of balloons still in the air”
Experts say the NAB’s new stance highlights the ongoing economic uncertainty and challenges facing the RBA as it continues its quest to control inflation and preserve economic stability.
Sally Tindall, director of data research at financial comparison site Canstar, said the timing of the first interest rate cut was still “incredibly grey”.
“Whether the RBA starts cutting the cash rate in February or May may seem minor in the grand scheme of things, but on a decent-sized mortgage it can add up,” she said.
“Canstar research shows the average homeowner with $600,000 of debt and 25 years remaining could end up paying almost $2,000 more in interest over the next two years following the start of rate cuts in May, as opposed to February.
“This change reminds us how many balls are still in play at this point, especially for a data-dependent central bank.”
RBA under pressure to cut rates
In a statement released in early November, the RBA stressed that the economy was still adjusting, with weak output growth and moderate household consumption due to past declines in real disposable incomes and economic conditions. restrictive financial terms.
Governor Michele Bullock has previously stressed the importance of “careful calibration” of monetary policy decisions, a sign that the RBA does not intend to rush its rate cuts despite pressure to provide relief to borrowers and lenders. businesses.
Some are pushing for the central bank to lower rates before the end of the year.
Australian Council of Trade Unions secretary Sally McManus said in late October: “Australians have a right to expect that our rates can and should begin to fall before the end of the year,” citing others major economies around the world which had already reduced their rates. .
“Australian families have spent three and a half years enduring the financial strain of trying to curb inflation.”
