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Following a cut at the February monetary policy meeting, a hold in April, and another cut in May, economists are penning a third 2025 cut at the upcoming RBA meeting.
Currently at 3.85 per cent, each of the major banks has predicted a 25 bp cut to bring the cash rate to 3.60 per cent at the 8 July meeting.
“Nothing the RBA will learn in the next five weeks makes it worth waiting until the August meeting to cut the cash rate,” said Westpac’s chief economist, Luci Ellis.
CBA said: “With underlying inflation now back in the target band and growing downside risks, we expect the RBA to deliver 25 bp rate cuts in July and August to bring the cash rate down to 3.35 per cent.”
“Given the likely impact of the tariffs on global growth, as well as those already evident on markets, ANZ Research expects the RBA to lower the official cash rate in May, July and August by 25 basis points at each meeting. That would see the cash rate at 3.35 per cent come August,” added Adam Boyton, head of Australian economics at ANZ.
And NAB said: “We now see the RBA cutting by a further 25 bps at the July, August and November meetings, taking the cash rate back to a broadly neutral stance of 3.1 per cent.”
If these predictions are anything to go by, consumers can expect some relief at tomorrow’s meeting.
Following the February and May cuts, just about every lender began immediately implementing the full recommendation.
Some lenders faced backlash following the February rate cut for not passing on the full 25 bp cut.
This saw an even quicker response from most after the May rate decrease.
If these trends persist, borrowers can expect immediate action from most to implement the full 0.25 per cent cut.
The RBA hinted in early June that consumers could expect a total of three cuts in 2025. If the July decrease is decided upon, it could be the last of the year.
As revealed in the Reserve Bank’s minutes for May’s monetary policy meeting, market pricing implied a total of three 25 bp cuts in 2025.
Economic conditions will influence the decision. Australian Bureau of Statistics’ (ABS) data shows the consumer price index (CPI) is well within the 2 per cent – 3 per cent target band, sitting at 2.4 per cent.
Meanwhile, unemployment has held steady at 4.1 per cent.
Household spending saw a 0.9 per cent rise in May. Indeed’s APAC economist, Callam Pickering, said this was “impressive” but said further rate cuts “may be necessary”.
“We believe the RBA will need to cut rates at least another couple of times this year to provide sufficient support to households and businesses, while ensuring that the unemployment rate remains low and we avoid recession,” he said.
“We expect the RBA to cut rates again when they meet in July, with another cut at either their August or September meetings.”
[Related: RBA hints at just one more rate cut for 2025]
