Westpac has revised its forecast for the first cash rate cut, now expecting it in May 2025 instead of February. This update aligns with NAB’s recent predictions. In a positive note, Westpac anticipates two consecutive rate cuts in May and July, rather than a prolonged period between adjustments. Chief Economist Luci Ellis indicated that while an earlier cut is still a possibility, it is less likely than the May timeframe. Ellis highlighted risks of a later cut if inflation trends do not align with the Reserve Bank of Australia’s (RBA) expectations. Currently, Westpac maintains its year-end prediction of a cash rate at 3.35 per cent by December 2025, a decrease of one percentage point from the current level. NAB echoes the notion of a May cut, while Commonwealth Bank and ANZ are still forecasting an earlier February adjustment. Ellis remarked on the RBA’s potentially rigid stance, suggesting that economic conditions could compel them to reassess their approach earlier than anticipated. This cautious environment mirrors previous instances where the RBA had to pivot quickly based on changing economic indicators, as seen with the Reserve Bank of New Zealand earlier this year. The RBA will announce its next monetary policy decision on December 10, followed by another meeting in February.
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