Earlier this week Westpac pushed back their RBA rate cut call to February 2025, from previously in November 2024
- Expects a conservative pace of 25bp cuts per quarter
- New terminal rate forecast of 3.35%, up from 3.10% previously
- RBA seen as more cautious, requiring stronger evidence before easing
- Bank cites RBA’s new analytical tools and focus on full employment indicators
- WPAC forecasts align with RBA on inflation, but more pessimistic on consumption
- Risks: RBA could delay cuts further if inflation surprises to upside
- Alternatively, cuts could come sooner if economy weakens materially
Key quote: “In wanting to be sure, the RBA Board is risking getting too far behind the curve, with inflation undershooting the target and unemployment rising further than strictly necessary.”
The bottom line: WPAC sees RBA as one of the last major central banks to cut rates, but warns of risks in both directions.
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Current RBA:
