Australia's biggest bank has revised its forecast for an RBA cash rate cut, pushing back the anticipated date from December 2024 to February 2025.
This update aligns with predictions from NAB, Westpac, and ANZ, all of which expect the RBA's first rate cut to come at its first 2025 meeting.
It comes on the back of inflation figures for the three months ended September, with consumer prices rising just 2.9% over the year prior.
"The September quarter 2024 Consumer Price Index (CPI) indicated that the disinflation process has continued," CommBank head of Australian economics Gareth Aird said on Wednesday afternoon.
"But not quite at the pace we anticipated on an underlying basis."
While headline inflation dropped to 2.8% in September, placing it within the RBA's target range of 2% to 3% for the first time since early 2021, trimmed mean inflation rose 3.5% on an annual basis.
Trimmed mean, the RBA's preferred inflation measure, excludes volatile items such as fuel and electricity.
"The RBA's aggressive tightening cycle has worked very well to slow growth in aggregate demand in the economy," Mr Aird said.
"Put simply, restrictive monetary policy is doing its job … the economy remains on the 'narrow path', as often described by the RBA."
The narrow path refers to that which the economy must trend in order to tame inflation without falling into a recession.
CommBank expects cash rate to drop 1% in 2025
The big bank expects the RBA to cut the cash rate by 25 basis points in February 2025, bringing it down to 4.10%.
More cuts totaling 75 basis points are anticipated over 2025, leaving the cash rate at 3.35% by year-end.
That's more hopeful than the broader market, with ASX traders not pricing in a full cut until May 2025 and seemingly expecting just 60 basis points of cuts over the course of next year, as of market close on 29 October 2024.
At last count, the typical interest rate on a new variable rate owner-occupier home loan was around 6.30% per annum.
That would see the repayments on a typical new owner-occupier home loan, worth around $636,000 in August 2024, coming in at more than $3,900 a month, assuming a 30-year loan term.
If lenders were to pass on a full 1% rate cut, those repayments could drop to just over $3,500, amounting to an annual saving of approximately $4,800.
Big four banks in agreement
It was just six weeks ago that CommBank waned to previous data and delayed its cash rate cut forecast from November to December 2024.
NAB adjusted its own expectations shortly after and now tips a February 2025 cut – previously May 2025.
That sees all four of the banking majors in agreement.
Meanwhile, they've each cut fixed home loan rates, with ANZ dropping some of its advertised fixed rates by as much as 25 basis points on Monday.
Image by Robert Myers on Wikimedia Commons
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