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RBA: Consensus Expecting Easing Cycle To Start In Q1 2025 With 25bp Per Quarter

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Analysts unanimously expect the RBA to keep rates unchanged at 4.35% when it announces its decision at 1430 AEST today. There are differences going forward though. Consensus is expecting the first rate cut in Q1 2025, likely on February 18, but there are still a number who don’t think it will be until Q2, likely May 20. If there are few significant changes to the November statement/forecasts then an extension of the prolonged hold is likely, but any softening of tone may signal an increased possibility of a February cut. 

  • Most economists expect easing to be gradual with 25bp per quarter in 2025 or less.
  • CBA was the last of the domestic banks to expect a rate cut this year but it pushed that out to February following the Q3 CPI data, which it said did not show enough of a moderation in trimmed mean inflation for the RBA to ease in 2024.
  • HSBC is only forecasting 50bp of easing in 2025 with the cycle starting in Q2 but it believes that there is a risk it could be later or that an easing cycle could be missed altogether. NAB expects a 25bp cut in February but also believes that the risks are skewed to a later start.
  • In contrast, Goldman Sachs sees the risks tilted to earlier and faster easing than its expectation of a February start with 25bp per quarter with 35bp in Q4. 

Sell-side OCR expectations bp

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Analysts unanimously expect the RBA to keep rates unchanged at 4.35% when it announces its decision at 1430 AEST today. There are differences going forward though. Consensus is expecting the first rate cut in Q1 2025, likely on February 18, but there are still a number who don’t think it will be until Q2, likely May 20. If there are few significant changes to the November statement/forecasts then an extension of the prolonged hold is likely, but any softening of tone may signal an increased possibility of a February cut. 

  • Most economists expect easing to be gradual with 25bp per quarter in 2025 or less.
  • CBA was the last of the domestic banks to expect a rate cut this year but it pushed that out to February following the Q3 CPI data, which it said did not show enough of a moderation in trimmed mean inflation for the RBA to ease in 2024.
  • HSBC is only forecasting 50bp of easing in 2025 with the cycle starting in Q2 but it believes that there is a risk it could be later or that an easing cycle could be missed altogether. NAB expects a 25bp cut in February but also believes that the risks are skewed to a later start.
  • In contrast, Goldman Sachs sees the risks tilted to earlier and faster easing than its expectation of a February start with 25bp per quarter with 35bp in Q4. 

Sell-side OCR expectations bp

Keep reading...Show less