RBA rates turn Bank predicts 50 point cut

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Australia's interest rate cycle has finally turned, with the RBA making its first cut in February 2025 to 4.10% before holding steady in April.

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NAB boldly predicts a hefty 50 basis point cut in May 2025, followed by further cuts to reach 2.6% by early 2026.

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CBA, Westpac, and ANZ forecast a more cautious approach with three 25 basis point cuts, bringing the cash rate to 3.35% by year-end.

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CBA believes a May rate cut is a "done deal" if inflation data aligns with expectations of headline inflation falling to 2.3%.

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A 25 basis point rate cut would reduce monthly repayments by $91 on a typical $600,000 mortgage, according to Canstar figures.

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RBA Governor Michele Bullock maintains a data-driven stance, refusing to commit to a predetermined path for rate cuts.

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March quarter inflation figures, to be released April 30, will heavily influence the RBA's May 19-20 meeting decision.

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NAB has revised economic projections downward, cutting GDP growth forecasts to 2.0% and predicting unemployment will peak at 4.4%.

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Donald Trump's 90-day tariff pause has "poured cold water on expectations of a bigger cut," according to ANZ economist Adelaide Trimbrell.

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Financial markets have fully priced in a 25 basis point cut in May, potentially creating volatility if the RBA moves more slowly than anticipated.

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