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Big four consensus on RBA cut in October

All four of the big banks expect another cut to the country’s cash rate when the Reserve Bank of Australia meets on October 1.

NAB analysts on Friday revised their initial forecasts of cuts in November and February to October and December, predicting the cash rate – currently at a record low of 1.0 per cent – would be slashed further to 0.5 per cent by the end of the year.

Commonwealth Bank researchers brought forward their own estimates on Thursday after ABS data indicated the jobless rate edged up to 5.3 per cent in August, with its economists anticipating cuts in October and February.

Westpac had already suggested two 25-basis-points cuts were on the way in October and February while ANZ noted on Friday that “the slow creep higher in the unemployment rate will be enough to prompt” the RBA to cut next month.

The central bank cut the cash rate by 0.25 percentage points in June and again in July, leaving it unchanged in August and September while hinting that more reductions were possible.

The RBA has said it is seeking to help lower the unemployment rate to about 4.5 per cent in order to boost wages and inflation.

The Bank of England and the Swiss National Bank left interest rates on hold on Thursday while the Norwegian central bank raised its policy rate by 25 basis points to 1.50 per cent and Bank Indonesia cut by the same amount to 5.25 per cent.

The RBA’s next three meetings to decide on the cash rate are on October 1, November 5 and December 3.

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Loren Webb

Loren Webb

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