Three of big four banks now agree on timing of first RBA cut
ANZ has revised its cash rate forecast, delaying its expectation for the Reserve Bank of Australia’s (RBA) first rate cut from February to May 2025.
The bank also lowered its projection for the total number of rate cuts in the next cycle from three to two, anticipating the cash rate will settle at 3.85% by the end of next year, down from the current 4.35%.
ANZ cited slower-than-expected progress in reducing inflation as a key reason for its adjustment. Its economic team stated that inflation falling within the RBA’s 2% to 3% target band by February “no longer looks likely enough” to justify a rate cut at that time, though the possibility has not been completely ruled out.
The update aligns ANZ with fellow major banks NAB and Westpac, which also recently pushed back their cash rate cut forecasts to May 2025. In contrast, Commonwealth Bank of Australia (CBA) continues to predict a February 2025 rate cut.
The prospect of fewer cuts could have a tangible impact on borrowers. According to Canstar data, for a $600,000 mortgage, two rate cuts instead of five could result in over $1,400 in additional interest costs, assuming lenders fully pass on the reductions.
Canstar insights director Sally Tindall (pictured above left) said that “May is firming up as a more realistic option for the timing of the first cut,” but warned borrowers to remain cautious, as the neutral cash rate may settle higher than previously predicted.
Similarly, RateCity money editor Laine Gordon (pictured above right) urged borrowers to act proactively.
“If you’ve got a mortgage and want your repayments to go down, take matters into your own hands,” Gordon said. “There are over 40 lenders offering variable rates under 6%, making refinancing an option worth exploring.”
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