Friday, February 7, 2025
33.9 C
Canberra

Big four bank says Aussies will have to wait even longer than expected for rates cut

It may take longer than expected for the Reserve Bank to finally cut interest rates. Westpac today pushed back its forecast for the first cash rate cut in 2025 from February to May, following NAB last week. The silver lining is that the big four banks now expect homeowners to benefit from back-to-back rate cuts in May and July, rather than staged over a longer period.

Australians will have to wait longer than expected for a rate cut, the big four banks say

Westpac now doesn’t expect a rate cut until May. (Natalie Bug) “An early rate cut in February or March remains possible, but is no more likely than May,” said Lucy Ellis, Westpac’s chief economist. “There is also a risk of delaying the rate cut date if inflation does not fall as the RBA currently forecasts, not to mention our own slightly more dovish expectations.” That said, the longer the RBA board waits, the quicker they will need to act, as there is a greater chance they will hesitate too long.” Explained: What the RBA is really thinking about when setting interest ratesWestpac has not changed its year-end rate forecast, still predicting a cash rate of 3.35 per cent in December 2025, a full percentage point below current rates. While NAB also expects the RBA to start cutting rates in May, the other two big four banks – Commonwealth Bank and ANZ – are both planning to cut rates in February. Ellis said that while recent comments from the central bank suggest rates will remain at current levels for six months, there is still a chance the RBA could be forced to change its outlook and act sooner.

Australians will have to wait longer than expected for a rate cut, the big four banks say

Westpac said the RBA’s messaging suggested a late rate cut, but that stance could change quickly. (Louie Douvis/AFR) “Things can change quickly and the RBA’s view on the economy looks more hawkish than we thought,” she said. “Recall that until February 2022 the RBA had not signalled that it expected to raise the cash rate any time soon.. but it did so in May of that year.” “When the facts change – and it’s clear that wage growth has finally picked up – you have to change your mind.” Recall also that the Reserve Bank of New Zealand also quickly shifted its stance this year. “Just a few months before the first rate cut in August, it looked like it would keep rates on hold throughout 2024.” The Reserve Bank board is due to issue its next decision on December 10 and its next meeting is in February.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Hot this week

Prime Minister Anthony Albanese promises $842 million cash injection for the Northern Territory

Prime Minister Anthony Albanese has made a landmark funding...

NSW doctors embrace ‘marshmellow’ moniker to highlight ‘catastrophic situation’ in public hospitals

Union says viral email stuff-up downplaying junior doctors’...

Why claims about referee favouritism are overshadowing the Super Bowl

Patrick Mahomes and the Kansas City Chiefs have been...

Glasgow 2026 Commonwealth Games to feature mile in athletics program after 60-year absence

Roger Bannister (left) leads home John Landy in the...

Topics

spot_img

Related Articles