ANZ has revised its prediction regarding when the Reserve Bank of Australia (RBA) is likely to start reducing interest rates, becoming the third major bank to do so. According to Canstar’s data insights director, Sally Tindall, May now appears to be a more realistic timeframe for an initial rate cut, although it may ultimately occur later. ANZ is now forecasting two rate cuts instead of three, potentially lowering the cash rate to 3.85% by year’s end—still considerably higher than the decade-long average.
Tindall emphasises that the RBA remains data-driven and lacks a clear strategy for the cash rate’s future, which adds uncertainty for mortgage holders. While a decline in rates is plausible, there is speculation that the neutral cash rate could settle higher than anticipated by many economists.
If the RBA only implements two rate cuts in the following year, borrowers might see their average mortgage rates fall just below 6%. Meanwhile, other banks, such as NAB and Westpac, are still predicting multiple cuts, while the Commonwealth Bank retains its forecast of four adjustments throughout the year, differing from ANZ’s more cautious stance.