Reserve Bank of Australia to cut interest rates say ANZ, Commonwealth Bank and Westpac

Reserve Bank of Australia interest rate forecast following the inflation data yesterday:

ForexLive Asia-Pacific FX news wrap: AUD dropped after CPI inflation data

ANZ is projectiing a 25 basis point reduction in the official cash rate at the February 17-18 RBA meeting.

• “The latest trimmed mean inflation print will be enough for the RBA to cut rates in February”
• “The annualized trimmed mean inflation over the last six months is within the RBA’s target band”
• “We believe inflation is sufficiently slow for the RBA to cut rates”
• “The price pressures causing inflation have slowed down enough due to slower economic momentum over 2024”

Commonwealth Bank expect the same,

• it’ll be a slow rate reduction path

analysts there were tipping the February cut even before the inflation data yesterday:

• February rate cut by the RBA

Westpac are also expecting a cut:

• Westpac changes its forecast to a February Reserve Bank of Australia interest rate cut

Of Australia’s big four banks only National Australia Bank is still expecting a May rate cut instead.

Independent firm Capital Economics are expecting a February cut also:

• “If trimmed mean CPI keeps rising at the same pace as it has over the second half of last year, it will reach the mid-point of the band by mid-year, whereas the RBA’s current forecasts assume that benchmark won’t be met until end-2026,”

• “The big picture is that today’s data should increase the RBA’s confidence that underlying inflation is declining sustainably towards target”
• “The upshot is that we now expect the Bank to begin its easing cycle in February, rather than May”

From the RBA website:

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