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CBA economists are now penning February 2026 as the next and final rate cut of this cycle after the latest inflation data from the Australian Bureau of Statistics (ABS) raised some concerns.
The ABS monthly inflation data for August saw inflation climb to 3 per cent. Economists across the board said this was higher than expected and played heavily into the RBA’s decision to hold rates at its September meeting.
CBA now joins NAB in being more conservative with rate forecasts. NAB recently pushed its cut prediction to May 2026. This means the major bank expects holds at the next four RBA monetary policy meetings.
NAB recently said the latest inflation data will usher in “restrictive policy”, and the bank’s economists “suspect it will take at least two, if not three, quarterly inflation prints to resolve the extent of signal in the Q3 inflation data.”
ANZ has also adjusted its stance following the outcome of the RBA’s September meeting. Just days ago, the major believed there would be a cut in November, keeping the cash rate at 3.35 per cent for an extended period.
Economists at ANZ have since said the November meeting will pass without a cut, and “the tone of yesterday’s post-meeting statement also suggests that we are quite close to the end of the easing cycle.”
Westpac is the last of the major banks that believes there could be a rate cut at the November meeting.
However, Westpac economists also said the “current base of a cash rate cut in November is far from assured,” but it is still on the table.
“The longer the [RBA board] delays further cuts, the more likely it is that it will end up cutting by more than it current envisages,” said Westpac chief economist Luci Ellis.
Time for a switch?
If the major banks’ economists are anything to go by, it could be months before borrowers are treated to reduced interest rates.
In a recent Broker Daily article, industry figures urged brokers to be proactive in engaging borrowers in discussing refinancing options to alleviate some financial strain.
According to a Canstar study, a borrower with a $600,000 mortgage could save $403 per month by refinancing from a 6.36 per cent rate (typical for May 2022) to a competitive 5.25 per cent rate.
“However, if this borrower continued to pay the same amount as they did on their previous loan, they could potentially save $225,620 over the life of their mortgage and pay it off 5 years and 3 months early,” said Canstar.
Sally Tindall, data insights director at Canstar, urged borrowers to “take control of their mortgage.”
“Just because the RBA is treading water, doesn’t mean borrowers have to,” she said.
“Refinancing does involve some paperwork, which can be a turnoff, but the numbers show it’s a game-changer.”
[Related: RBA holds, industry reacts]
