RBA
With the RBA maintaining its neutral stance and “not ruling anything in or out” and significant uncertainty over when inflation will return to the band, it is not surprising that there is a variety of views as to when the easing cycle will start (see table). The RBA has made it clear that it is still too early to discuss rate cuts and very few in Bloomberg’s May survey expect a move before end-2024.
- The median forecast in Bloomberg’s May 22 survey is for the first 25bp RBA cut in Q4 2024 with another 100bp by Q4 2025. There is a range of projections with Q4 2024’s 3.6-4.6%, but only one forecasting a hike, and Q4 2025’s 2.85-3.85%. 5/35 analysts expect the first rate cut in Q3 this year.
- The major local banks are forecasting the first rate cut in November this year, which will be a meeting with updated projections. They are not in agreement though as to how much easing there will be in 2025 with CBA, Westpac and NAB all expecting 100bp but ANZ thinking it will be 50bp and Macquarie 75bp.
- A number of major international banks are not forecasting the first rate cut until Q1 2025, including UBS, Morgan Stanley and JP Morgan. HSBC is more hawkish timing easing for Q2 and noting that there is a risk that the next move will be a tightening.
- The federal election is due by May 2025 and the timing of that may impact the start of the easing cycle so the RBA maintains its independence.
Australia OCR rate expectations May 2024
265 words