Top economists at ANZ, Commonwealth Bank and NAB are now predicting interest rates will not rise any higher this year and will start to fall from the middle of next year.
ANZ Changes Rate Call
ANZ today changed its rate call to predict two cash rate cuts in 2027. It had previously expected rates to remain steady for the foreseeable future.
HSBC's Revised Outlook
HSBC’s Paul Bloxham also has now changed and expects no change until cuts in late 2027. Bloxham said: "Inflation is still too high and is set to rise further before it falls. That being said, the RBA has already taken significant action to deal with this surge in inflation – and, critically, the action is working … We expect the RBA to be on hold in June. Although there is some risk the RBA might choose to hike again beyond that, we expect the weakening in growth to convince them to be on hold."
Commonwealth Bank and NAB Hold Steady
Commonwealth Bank has not changed its prediction that the RBA will stay on hold before cutting twice in mid-2027. NAB expects a similar trajectory.
Market Bets Differ
But financial markets are still betting a hike is more likely than not over the next 12 months. Westpac today reaffirmed its view that the cash rate will rise in August and September this year, with no cuts until 2028. Its chief economist, Luci Ellis, today predicted inflation would peak at 4.7% late this year, lower than she previously expected but still higher than the RBA now expects it to be.
