ICYMI – NAB forecast a Reserve Bank of Australia rate cut at the first meeting of 2025

A note this week from National Australia Bank shifting forward their projection for the RBA:

• We have brought forward our expectations for the timing of rate cuts, now seeing a first cut in February 2025 (previously May)
• we continue to see a gradual pace of cuts back to 3.10% by early 2026

Main points from the note, in summary:

• Nov/Dec cuts ruled out despite GDP growth near 1.0% y/y
• Capacity utilization remains elevated

• Inflation risks prompt delay in first cut timing
• Q3 CPI expected at 0.8% q/q (3.5% y/y) trimmed mean
• Labor market holding stronger than expected; unemployment to stabilize ~4.5%

RBA seen engineering soft landing with gradual normalization as inflation subsides while maintaining full employment. Labor market resilience and above-target inflation warrant cautious approach despite slowing growth.

NAB highlight the next key event as Q3, due October 30 – will be impacted by subsidy effects but the detail should show steady progress on inflation.

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The Reserve Bank of Australia meet on November 4 and 5, then December 9 and 10.

Meetings next year for the RBA

This article was written by Eamonn Sheridan at www.forexlive.com.