February rate cut: NAB joins other banks in move
NAB has joined the other major banks in bringing forward its first rate cut to February, with all “big four” now expecting the cut to occur at next month’s RBA meeting.
The National Australia Bank (NAB) has advanced the timing of its first rate cut forecast to February, following the recent consumer price index results of 2.4 per cent, right within the Reserve Bank of Australia’s (RBA) target band of 2–3 per cent.
Additionally, the Australian Bureau of Statistics data showed that the trimmed mean inflation, which reduces irregular large price rises and falls, dropped from 3.6 per cent to 3.2 per cent over the quarter.
The trimmed mean inflation rate is now at its lowest annual rate since December 2021, below the peak of 6.8 per cent recorded at the end of 2022.
NAB’s move follows that of the other big Australian banks – CBA, Westpac and ANZ – which brought their rate cut timing forward earlier this year.
While all banks agreed to a first rate cut in February, the number of cuts is still debated.
The ANZ is forecasting two rate cuts in 2025, while CBA and Westpac eye four rate cuts.
NAB is the only bank expecting five rate cuts over the next 12 months.
Canstar data insights director, Sally Tindall, said while a rate cut is likely to happen, the decision lies with the RBA.
“Australia is a major step closer to the start of cash rate cuts on the back of this latest set of inflation results, after what has been more than two gruelling years of higher rates,” Tindall said.
“The RBA will almost certainly consider the case for a cut when it meets in just under three weeks’ time, and could well pull the trigger on it now it has these better-than-expected inflation results under its belt.
“There’s a chance sticky services inflation could cause a nervous board to keep the cash rate on pause, however, this dataset is now moving in the right direction, while core inflation has recorded two decent-sized drops in the last couple of quarters,” the data insights director remarked.
Tindall said a rate cut would be appreciated for borrowers who have been feeling the cost-of-living increase.
According to Canstar, one 0.25 percentage point cash rate cut, if passed on in full by the banks, would see the monthly repayments on a $600,000 mortgage and 25 years remaining drop by $92.
Canstar’s previous analysis predicted that under two cuts, the drop in monthly repayments could be $183 and $359 for four cuts.
“Rate cuts will be a weight off the shoulders of borrowers across the country and could potentially put the wind back in the sails of home buyers,” Tindall concluded.