Three of Australia's four major banks now expect interest rates to fall next year, according to top economists. ANZ, Commonwealth Bank, and NAB are predicting that the Reserve Bank of Australia (RBA) will not raise rates any further this year and will begin cutting from the middle of 2027.
ANZ Changes Its Forecast
ANZ revised its rate call today, now forecasting two cash rate cuts in 2027. Previously, the bank had expected rates to remain steady for the foreseeable future.
HSBC Also Shifts Position
HSBC's Paul Bloxham has also changed his outlook, now anticipating no change until cuts in late 2027. Bloxham commented: "Inflation is still too high and is set to rise further before it falls. That being said, the RBA has already taken significant action to deal with this surge in inflation – and, critically, the action is working … We expect the RBA to be on hold in June. Although there is some risk the RBA might choose to hike again beyond that, we expect the weakening in growth to convince them to be on hold."
Commonwealth Bank and NAB Hold Steady
Commonwealth Bank has not changed its prediction that the RBA will stay on hold before cutting twice in mid-2027. NAB expects a similar trajectory.
Financial Markets Remain Divided
Despite these forecasts, financial markets are still betting that a rate hike is more likely than not over the next 12 months. Westpac reaffirmed its view today that the cash rate will rise in August and September this year, with no cuts until 2028. Its chief economist, Luci Ellis, predicted inflation would peak at 4.7% late this year, lower than her previous expectation but still higher than the RBA's current forecast.
