Saturday, April 29, 2023
HomeMortgageThree big banks now expect a second cash rate pause in May

Three big banks now expect a second cash rate pause in May


Westpac has revised its cash rate forecast and is now expecting the cash rate to remain on hold at Tuesday’s Reserve Bank meeting, with the bank’s economic team saying it’s likely to have already reached its peak.

With Westpac tweaking its forecast from a 0.25-percentage-point increase to a pause, only Commonwealth Bank remained the only big four bank predicting a hike on Tuesday, although CBA’s economic team has stressed it is a line-ball call. 

The change also meant that two of the big four bank economic teams – Westpac and NAB – believed the cash rate had already hit its peak at 3.6%. 

RateCity.com.au compiled the big four bank’s current cash rate forecasts:








 

Tuesday’s RBA meeting

Cash rate peak

Forecasted cuts

CBA

+0.25% to 3.85%

3.85%, May 23

4 x 0.25% cuts, end 2023 to 2024

Westpac

On hold at 3.6%

3.6% March 23

4 x 0.25% cuts in 2024 + 2 x 0.25% cuts in 2025

NAB

On hold at 3.6%

3.6% March 23

2 x 0.25% cuts in 2024

ANZ

On hold at 3.6%

3.85% Aug 23

1 x 0.25% cut Nov 2024

 “It’s going to be an extremely close call at next Tuesday’s meeting but the odds are stacking up in favour of a pause,” said Sally Tindall (pictured above), RateCity.com.au research director.

 “There’s not a huge amount in this month’s data that would push the RBA into further action, in favour of buying itself more time to see what impact the 10 previous hikes have had.

 “Front of mind for the RBA is the fact that some households haven’t yet started paying for the February hike, let alone the March one. Households are still catching up to these rate hikes, rather than catching their breath. A pause across two consecutive months will give the RBA a much better indication of how households are holding up.

 “That said, people with a mortgage should still plan for a hike on Tuesday. If it doesn’t come next week, it could be only a matter of months away,” Tindall said. “If it doesn’t come at all, then you’ll have given yourself a bit of extra breathing space and that’s never a bad thing.” 

Use the comment section below to tell us how you felt about this. 

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -
Google search engine

Most Popular

Recent Comments