- Commonwealth Bank says there will be no rate cuts in 2024
The Commonwealth Bank now says rate cuts will not come before Christmas.
Australia’s largest property lender has changed its forecast for the Reserve Bank to cut rates in February rather than November after minutes of the RBA’s August meeting were released stressing there will be no easing in 2024.
Gareth Aird, head of Australian economics at the Commonwealth Bank, said it was bad news for borrowers.
“The minutes of the August meeting indicate that if economic data evolve in line with the RBA’s latest forecasts, the cash rate is likely to remain unchanged for an extended period (i.e. until at least February 2025),” he said.
A fortnight ago, RBA Governor Michele Bullock said financial markets were wrong to predict rate cuts in November and December.
But minutes of the Aug. 5-6 meeting, released Tuesday, emphasized that financial markets were dreaming if they thought a rate cut was coming this year.
“That said, members noted that the forecasts were uncertain,” he said.
‘Importantly, they also relied on a conditional assumption, derived from market expectations, that the cash rate would be reduced several times over the next year, starting later in 2024.
Commonwealth Bank now says rate cuts won’t happen before Christmas
‘Based on what they knew at the time of the meeting, members agreed that monetary policy would need to be tighter than this implied path to bring inflation sustainably to target within a reasonable time frame.’
The 30-day interbank futures market continues to predict rate cuts in November and December.
Last week, the Commonwealth Bank also cut its term deposit rates by 50 basis points, in a sign that banks have stopped competing for depositors’ business.
NAB and ANZ have also cut their term deposit rates.
Two weeks ago, Governor Michele Bullock said financial markets were wrong in predicting rate cuts in November and December.
