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Big bank changes RBA rate call as cost pressures ease
NAB now expects the Reserve Bank to keep rates at 4.35% through 2026 as slowing growth and softer cost pressures reduce the case for another hike.
National Australia Bank joined Commonwealth Bank and ANZ in forecasting the Reserve Bank of Australia will hold the cash rate at 4.35% for the rest of 2026, reversing previous predictions of further hikes.
Slowing economic momentum and softening labor market conditions prompted NAB chief economist Sally Auld and head of Australian economics Gareth Spence to revise their rate outlook, citing significant headwinds facing the country.
Consumer sentiment hit 80.6 in June according to the Westpac-Melbourne Institute survey, as cost-of-living pressures and federal budget tax changes weigh heavily on households.
Yet the 30-day inter-bank futures market still anticipates one more rate hike by year's end, a move that would push the cash rate to a 15-year high of 4.6%.
NAB senior economists project the Reserve Bank will likely commence cutting interest rates in the first half of next year, diverging from market speculation suggesting a final hike by Christmas.