- NAB predicts rate cut in February 2025
A major bank has revised its interest rate forecasts for the Reserve Bank to provide relief in February.
NAB, Australia’s largest business lender, on Monday adjusted its forecasts for the RBA to cut rates in February rather than May.
This would see the cash rate fall from a 12-year high of 4.35 percent to 4.1 percent after the summer holidays.
This would shave $105 off monthly payments on an average mortgage of $641,000.
National Australia Bank also cut its rates by 25 basis points during each quarter of 2025 until the cash rate fell to 3.1 percent in early 2026 for the first time since February 2023.
NAB economists Alan Oster and Gareth Spence said it was still too early to predict a rate cut in 2024 because inflation was still taking some time to moderate.
“Domestic inflationary pressures are cooling, but only gradually, and we continue to hope that the conditions for a cut will not be met this year,” they said.
A major bank has revised its interest rate forecasts for the Reserve Bank to provide relief in February.
“The risk has tilted towards a first cut in early 2025, and today’s change recognizes that the risk balance has probably changed enough for the RBA to feel comfortable cutting a little sooner than we expected.”
NAB has adjusted its forecasts 11 days after the Commonwealth revised its predictions for the RBA to cut rates in December instead of November.
Reserve Bank Governor Michele Bullock highlighted earlier this month that interest rates were unlikely to be cut in 2024 because inflation was still too high.
But after last week’s meeting, he admitted that a rate increase was not considered this time.
“We did not explicitly consider an interest rate increase at this meeting,” Ms. Bullock told reporters.
Treasurer Jim Chalmers praised this change in language, despite previously accusing her of “crushing the economy” with rate increases.
“I think it’s really good that the governor of the Reserve Bank is a more prominent voice in the national economic debate,” he told reporters on Monday.
“I try to let the governor of the Reserve Bank speak for herself and speak on behalf of her board, I respect and value her independence and I try not to doubt the decisions that the Reserve Bank makes independently.”
A 25 basis point rate cut would cause average monthly payments on a $640,998 mortgage to fall $105 to $3,943, down from $4,048.