Yahoo Finance When CBA, Westpac, ANZ and NAB think interest rates will go down
Three of the Big Four banks believe the cash rate has now peaked, while one thinks borrowers could be in for more pain.
Australia’s Big Four banks are predicting interest rate cuts in 2024, but borrowers may need to wait until the end of the year to get relief.
Economists from Commonwealth Bank (CBA), Westpac and ANZ believe the cash rate has now peaked at 4.35 per cent, with NAB the only major bank thinking borrowers could be in for another round of pain in February.
It comes as millions of Aussie mortgage holders were dealt a blow by the Reserve Bank’s (RBA) rate hike this week, with the average borrower with a $500,000 loan set to pay an extra $76 per month as a result of Tuesday’s decision.
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CBA - September 2024
Australia’s biggest bank believes the RBA will make its first interest rate cut in September 2024.
“Our base case sees the RBA Board leaving monetary policy on hold from here. And we have pencilled in September 2024 for the start of a monetary-policy-easing cycle. But we acknowledge the risk in the short run sits with another interest rate increase, particularly given the RBA retains a tightening bias,” CBA head of economics Gareth Aird said.
Aird said the probability of a December rate hike was “quite low” but if the RBA did choose to pull the trigger again it would likely be in February 2024.
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Westpac - September 2024
Westpac also believes the cash rate has now peaked and we will see the first rate cut in September 2024.
“We do not expect that the RBA will follow up with another rate increase in December … there is not enough new information between now and the December meeting to drive a change in view,” Westpac chief economist Luci Ellis said.
“So, while a December move is unlikely, it is more likely that February meeting would become ‘live’ if the inflation outlook continues to lift.”
NAB - November 2024
NAB is the only major bank betting on another 0.25 per cent hike in February, which would bring the cash rate to 4.6 per cent.
“Reflecting recent data, the staff’s inflation outlook has been revised up and we now see one further rise as likely to balance the risks, pencilling in a 4.6 per cent rate peak in February, though December is live,” NAB economists wrote.
NAB thinks the RBA won’t start cutting rates until November 2024 - revised from August - with gradual cuts expected through 2025 and early 2026 to bring the cash rate to 3.1 per cent.
ANZ - Very late 2024
ANZ does not think a further rate hike is likely at the moment and thinks the RBA won’t start cutting rates until late 2024.
“The RBA raised the cash rate 25 basis points at the November meeting and delivered a hawkish statement, signalling inflation is likely to take longer to return to target than previously expected,” ANZ senior economist Adelaide Timbrell said.
“Any change in the cash rate over the next six months is much more likely to be a hike than a cut, as the resilient economy and the persistence of inflation push back the likely timing of a rate cut to very late 2024."
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