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The Commonwealth Bank of Australia (CBA) stands out as the only major institution forecasting a February rate cut, anticipating a 25-basis-point reduction. It further predicts up to 100 basis points of easing over the year, which would bring the cash rate down to 3.35%. CBA points to recent RBA commentary as a signal that policy easing could be on the horizon, but it notes the final decision remains uncertain.
Both National Australia Bank (NAB) and ANZ acknowledge the possibility of a February cut but are less definitive. ANZ highlights trimmed mean inflation falling below the RBA’s forecast, which it sees as increasing the likelihood of a cut, but stresses the resilience of the labour market as a key factor for the RBA’s timing.
Similarly, NAB points to improving inflation trends and argues that they are not a barrier to rate cuts, while noting the strong labour market suggests a more measured approach, with February only a tentative possibility.
Meanwhile, Westpac has ruled out a February cut entirely. It attributes this to steady employment conditions and low unemployment, which it believes reduce the need for immediate changes. Instead, the bank sees rate cuts occurring later in 2025, tied to improving economic growth, with April or May seen as more plausible timelines.
Recent Consumer Price Index (CPI) data has nudged market expectations slightly toward a potential rate cut in April, but ultimately, the decision hinges on the RBA’s ongoing assessment of inflation and labour market dynamics.
