Three of 'big four' think RBA cut may come in November
In response to inflation data released by the Australian Bureau of Statistics last week, Westpac has revised its forecast, pushing its first cash rate cut prediction to November 2024, aligning with those from fellow big banks NAB and ANZ.
The Commonwealth Bank of Australia, however, anticipates a potential rate cut as early as September, although it acknowledges risks of a delay until November.
Economists remain divided over the RBA’s monetary policy direction in 2024, with predictions ranging from no cuts to up to three reductions. This uncertainty poses significant implications for borrowers, especially those with high debt levels relative to their income.
Research from financial comparison website RateCity.com.au indicates that a borrower with a $500,000 loan could find themselves $226 out of pocket each month if the anticipated rate cuts do not materialise.
“These CPI figures are a timely reminder not to bank on a rate cut before it hits your bank account,” said Sally Tindall, research director at RateCity.com.au. “While the 13 RBA rate hikes have played a lead role in pushing inflation from the dizzying heights of 7.8% at the end of 2022, down to just 3.6% today, there’s still work to be done.
“The RBA won’t be hitting the panic button, and it certainly won’t be reverting back to rate hikes on the back of these inflation figures, however, it will be peeling back every layer of this ABS data to see where the risks lie.
“The last thing the RBA wants to do is cut the cash rate, only to find inflation misbehave and the board has to do an about-turn.”
Tindall also advised borrowers to focus on sustaining their current mortgage repayments through the end of 2024, rather than anticipating imminent rate cuts.
“If you want a rate cut, understand that right now, the ball is in your court, not the RBA’s. The banks are still in the mood to negotiate, and you might find you nab your own personal rate cut before the month’s out,” she said.
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