Sydney: All of Australia’s “Big Four” banks have said they expected the country’s central bank to cut interest rates in February after inflation fell to a three-year low.
According to Namibia Press Agency, the National Australia Bank (NAB) stated on Thursday that it now predicts the board of governors of the Reserve Bank of Australia (RBA), the nation’s central bank, will cut the cash rate target when it meets in mid-February. This forecast follows the release of data by the Australian Bureau of Statistics on Wednesday, indicating that the headline rate of inflation was 2.4 percent in the 12 months to the end of December 2024, with the underlying inflation rate at 3.2 percent during the same period. Both figures are the lowest reported since 2021.
The RBA had previously anticipated underlying inflation to be at 3.4 percent for the year ending in December. These figures have led the NAB to reassess its stance on a potential rate cut in February, having earlier forecasted no change until May. Alan Oster, the
bank’s chief economist, commented on Thursday that “this now makes February the most likely starting point for a gradual easing in interest rates.”
Following the release of the recent inflation data, Westpac has also revised its rate cut prediction from May to February. Meanwhile, the Commonwealth Bank of Australia and ANZ bank were already forecasting a rate cut in February. The RBA board has maintained the key interest rate at 4.35 percent since November 2023 after a series of hikes aimed at curbing inflation. Before these increases, the cash rate target was at an all-time low of 0.1 percent from November 2020 to April 2022.
Both the NAB and the Commonwealth Bank anticipate that the interest rate will be gradually reduced to 3.35 percent by the end of 2025.