Commonwealth Bank Forecasts RBA Rate Cut in May
Synopsis
A recent forecast from the Commonwealth Bank of Australia (CBA) is projecting the Reserve Bank of Australia (RBA) cut is a “done” deal if inflation lines up with its projections. Currently, the CBA is…
A recent forecast from the Commonwealth Bank of Australia (CBA) is projecting the Reserve Bank of Australia (RBA) cut is a “done” deal if inflation lines up with its projections. Currently, the CBA is forecasting inflation will fall towards the bottom of the RBA’s target range. The forecast for the next quarterly data will come out on April 30. The data is expected to lead to an RBA rate cut.
“Following the March labour force survey, we think a 25 basis point rate cut in May is still more likely than not if the trimmed mean CPI prints in line with the RBA’s forecast,” CBA senior economist Stephen Wu said.
Big Mortgage Savings
A 25 basis rate cut could mean big savings for mortgage holders. Monthly payments on a $600,000 mortgage would drop by $91.
The RBA stated that the May meeting would allow members to revisit the discussion of monetary policy with the new economic data.
Westpac’s Predictions
Westpac is predicting an RBA rate cut that could take the cash rate down to 3.85 per cent. Westpac senior Michael Gordon said that Wespac expects inflation figures to go up. However, their forecasts are still mostly in line with the details.
“We expect that headline inflation will remain within the target band over the year ahead, albeit on the higher side – we are forecasting a peak of 2.8 per cent in the December 2025 quarter,” he said.
Additionally, the recent uptick in Australian employment may affect rates, according to Westpac economist Ryan Wells.
“Labour demand looks to have largely moved in tandem, with employment rising +32k, falling short of expectations,” he said.
The RBA will likely see data in line with expectations, relative to employment numbers.
Sources:
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