CBA, ANZ, Westpac offering little optimism for mortgage holders, while NAB sharpens talons with hawkish 2026 prediction
There is a near-universal expectation that the Reserve Bank of Australia (RBA) will hold the cash rate at 3.6% when the Monetary Policy Board convenes today.
But in case you forgot, the RBA has been less than predictable in 2025.
Just two months ago, the banking majors had egg on their collective face when the RBA under Michele Bullock (pictured) decided to hold at 3.85%, following two 25-basis-point cuts earlier in the year.
All major banks, including ANZ, Commonwealth Bank, Westpac and NAB, and essentially every market analyst, had anticipated the RBA to trim another 25 bips off the cash rate. A third cut eventually followed in August, bring the cash rate to 3.6%.
With that shock decision still fresh in people’s minds, it’s hard not to approach consensus forecasts leading into next week without a healthy dose of scepticism.
Alas, given inflation edged back up to a 12-month high in August, thanks to higher electricity and housing costs, anticipating a hold is the safest bet.
NAB has taken things further by pushing its forecast for the RBA’s next rate cut to May 2026, following those stronger-than-expected inflation figures earlier in the week. Previously, NAB had tipped a rate cut as early as November, then February, but now sees further easing delayed amid persistent inflation pressures.
November rate cut on the cards
While NAB has adjusted its outlook, CBA, Westpac, and ANZ still forecast a November cut.
CBA sees the cash rate dropping to 3.35%, but admits the data may delay that move. Westpac has pulled back its near-term expectations, citing stubborn inflation in services. ANZ now predicts the RBA will hold through 2025 unless labour market conditions worsen.
Yet CBA is also growing hawkish, warning that a November cut is “by no means guaranteed and will be highly dependent on the data flow from here”.
ANZ, meanwhile, reasserted its hold through to 2026 stance today, saying in a research note: “There is now a real risk of no rate cut in November, with the near-term path for rates highly data dependent (with the RBA also likely to make that latter point next week).”
The key data between now and the November meeting will be the September labour force release, household spending data and the Q3 CPI, said ANZ.
“Ahead of those data points… we will hold our November rate cut call for now. We also retain our view that once the cash rate reaches 3.35% it is likely to stay at that level for a considerable period.
“As has been the case since we moved to a 3.35% ‘terminal’ cash rate in April, our conviction in that being the end point for this cycle is higher than our conviction on when exactly that occurs.”
Over at Westpac, analysts conceded that the modest upside inflation surprise “caused some market participants this week to doubt the pace and scale of the RBA’s rate cutting cycle”, yet November, February and May rate cuts “remain our baseline expectation”.
Mortgage holders undoubtedly would like to see a bit for optimism for another 25-basis-point cut today, but the consensus is they’ll have to wait until at least November.
Then again, recent history has been full of surprises.
