Mortgage holders are almost certain to get another repayment reprieve when the central bank next meets, experts say, as Australia's big banks reveal how far rates could fall.
The Reserve Bank of Australia (RBA) will leave the cash rate on hold at 4.35 per cent at its next meeting on Tuesday, according to a survey of 27 experts by financial comparison site Finder. Three big banks — the Commonwealth Bank, Westpac, and NAB — also tip a pause.
It comes after the Australian Bureau of Statistics' (ABS) came in at 4.10 per cent in the December quarter, down from 5.40 per cent in the September quarter.
"The December quarter figures were good enough to rule out whatever little prospect there was of the RBA raising rates again – but not, in my opinion, good enough to warrant any expectation that they'll cut rates at that meeting," independent economist Saul Eslake said in comments distributed via Finder.
When, and how far, could interest rates fall?
Eslake said he did not believe the RBA would drop rates this year. NAB, Westpac, and the Commonwealth Bank say there could be a cut.
Westpac and the Commonwealth Bank predict the first cut will be in September and rates will fall to 4.10 per cent, according to rate comparison website Mozo. NAB believes the 0.25 per cent drop will happen in December.
The Commonwealth Bank forecasts rates could fall to 2.85 per cent in June 2025. Westpac forecasts they will drop to 3.10 per cent in September next year, while NAB believes they will fall to 3.10 per cent in December 2025.
The Reserve Bank of Australia has been hiking rates in a bid to tackle inflation. Source: AAP / Bianca De Marchi
ANZ is yet to make public its predictions.
The RBA has been lifting interest in a bid to bring inflation back within its 2-3 per cent target range.
State premiers call for interest rate cuts
Queensland Premier Steven Miles has implored the central bank to cut rates.
"The Reserve Bank needs to start cutting interest rates now to take pressure off households," he posted on social media on Thursday.
"And there's no rule the banks can't cut their rates first. Many of them lifted their rates before the RBA."
His comments were mirrored by Victorian Premier Jacinta Allan and Western Australia counterpart Roger Cook.
Responding to a question on whether it was appropriate for these state Labor premiers of Queensland, Victoria, and Western Australia to "demand" a rate cut ahead of the RBA's next meeting, federal frontbencher Jason Clare said he believed "all Aussies wanted to see rates go down".
"It is a matter for RBA, though," Clare told the Seven Network's Sunrise program.
"To get them to cut interest rates we have to get inflation down - that's happening."
Federal Opposition leader Peter Dutton told Nine's Today show on Friday the premiers would be better off concentrating on the issues in their states like ambulance ramping and youth crime.
"The independence of the Reserve Bank is important so that there's not political interference ... they should concentrate on fixing up their own problems," he said.
However, Dutton said the Coalition would also like to see rates fall.
