The Commonwealth Bank of Australia (CBA) has revised its forecast regarding interest rate cuts by the Reserve Bank of Australia (RBA) and no longer expects a reduction before December 2024. Previously, CBA was the sole bank predicting a cash rate decrease to 4.35% this December, while the other major banks anticipated a cut in February 2025. The bank’s economists noted that although core inflation fell to 3.5%—the lowest since December 2021—it remains outside the RBA’s target range of 2-3%.
Sally Tindall from Canstar expressed that hopes for a cash rate cut in 2024 have diminished, citing that the recently reported inflation figures are skewed by temporary electricity rebates and fluctuating petrol prices. Moreover, underlying inflation is still too high for the RBA to make changes, especially with services inflation showing an upward trend.
Currently, all major banks project that the RBA will implement rate cuts in February 2025, with varying predictions: ANZ foresees three cuts of 0.25%, CBA and Westpac expect four, and NAB suggests five cuts. Should four cuts occur, it could lead to a monthly repayment decrease of $357 for a $600,000 mortgage, amounting to nearly $4,500 annually.