- Westpac now tips May rate cut
Westpac now expects the Reserve Bank to cut interest rates in May rather than February.
On Thursday morning, chief economist Luci Ellis, a former RBA assistant governor, called for relief to be delayed until after Easter, a week after the NAB adjusted its forecasts.
“An earlier start, in February or March, is still possible, but it is no longer more likely than a May start date,” he said.
“A later start date is also a risk scenario, if inflation does not ease as the RBA is currently forecasting, let alone our own slightly more dovish expectation.”
Dr Ellis said the Reserve Bank’s November meeting minutes, published this week, suggested it was more concerned about inflation rising again, following the expiry of $300 electricity rebates.
“That’s almost certainly how the board and staff think about the outlook,” he said.
“This suggests they will wait longer than we previously believed.”
The minutes said the RBA “would need to see more than one good quarterly inflation result to be confident that such a decline in inflation was sustainable”.
The Commonwealth Bank and ANZ are still expecting a rate cut in February.
Westpac now expects the Reserve Bank to cut interest rates in May rather than February.