Three of Australia’s largest banks, CBA, NAB, and ANZ, are indicating that there is a possibility of interest rate relief for mortgage holders in the near future, following encouraging inflation data.
The Reserve Bank of Australia (RBA) is anticipated to begin reducing the cash rate, currently set at 4.35 percent, at some point this year, although the exact timing remains uncertain.
A potential rate cut in February could provide significant relief for many homeowners. A recent Yahoo Finance poll revealed that almost 25% of participants would face the necessity of selling their homes if the RBA does not implement a rate cut during its first meeting of the year.
Economist Stephen Koukoulas, a contributor to Yahoo Finance, has stated that a reduction in the official cash rate is expected to occur soon.
Regarding the banks’ perspectives on a February rate cut, ANZ pointed to the latest Consumer Price Index figures, which may bolster the RBA’s confidence to lower interest rates in the near future. They noted that trimmed mean inflation is currently tracking below the RBA’s forecasts.
ANZ has revised its expectations, now forecasting a rate cut as early as February instead of May, anticipating trimmed mean inflation to be 0.5 percent for the December quarter and 3.2 percent annually.
NAB echoed similar sentiments, stating that inflation is approaching the RBA’s target range of 2 to 3 percent, which increases the likelihood of a rate cut in February. NAB’s senior economist, Taylor Nugent, emphasized that the current inflationary conditions appear more favorable than the RBA’s cautious projections from November.
However, he also noted that the combination of a modestly restrictive starting point and a strong labor market diminishes the urgency for immediate cuts.