November 29th 2024.
ANZ has joined the ranks of Westpac and NAB, becoming the third of the big four banks to revise their prediction for when the Reserve Bank will initiate a cut to interest rates. According to ANZ, the cash rate, currently at a 13-year high of 4.35 per cent, is not expected to decrease until May. This update aligns with the forecasts of Westpac and NAB, who also anticipate a rate cut in May.
Sally Tindall, Canstar's data insights director, believes that May is now a more realistic timeline for the first cash rate cut. However, she also notes that there is a possibility for it to be pushed back even further. Tindall emphasizes that the RBA's decisions are heavily influenced by data and that mortgage holders should also keep a close eye on the situation.
In addition to expecting a delayed initial rate cut, ANZ has also revised their predictions from three cuts to only two for the year. This would bring the cash rate down to 3.85 per cent by the end of 2025, still significantly higher than the previous decade. Tindall comments on ANZ's adjustments, stating that they could very well become a reality. She also acknowledges the resilience of Australians in the face of the steep rise in the cash rate.
Tindall further explains that while it is likely that rates will decrease from their current position, the RBA may still settle on a higher neutral cash rate than some economists anticipate. If ANZ's forecast proves true, borrowers should prepare for an average mortgage rate that will only drop to just under 6 per cent.
Both NAB and Westpac also expect a rate cut in May, with NAB predicting a total of five cuts and Westpac forecasting four by the end of 2025. Commonwealth Bank is the only one of the big four banks to maintain their initial prediction of a rate cut in February. They also believe that four decreases throughout the year is the most probable path for the RBA.
ANZ's updated forecast came the day after Reserve Bank Governor Michele Bullock expressed that core inflation is still too high for a rate cut and that unemployment is also too high to justify one. To stay updated on the latest breaking news, sport, politics, and weather, download the 9News app and receive notifications straight to your smartphone. The app is available on both the Apple App Store and Google Play.
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