When will interest rates go down in Australia?
When will interest rates finally go down in Australia?
This is the million-dollar question we’d all love to have answered, especially considering the current economic climate. Many households nationwide genuinely feel the financial pinch from the higher interest rates that have proven to be significantly more burdensome than those experienced during the COVID pandemic. Many buyers are currently sitting on the fence, hesitating to make a decision and waiting to see if their borrowing capacity will improve in the near future.
Here are some key facts that may help you make a decision.
As of February 10, 2025, the Reserve Bank of Australia's (RBA) official cash rate is 4.35%. Recent economic indicators, particularly the latest inflation figures, have led many economists to anticipate that the RBA may initiate rate cuts shortly. Some forecasts suggest that the first reduction could occur as early as the RBA's February 18, 2025 meeting.
The Key economic indicators are
Inflation (Consumer Price Index, CPI)
Gross Domestic Product (GDP)
Unemployment Rate
Wage Growth
Commodity Prices
Consumer Confidence
Housing Market
Global Economic Conditions
Government Fiscal Policy
Exchange Rates
The major Australian banks have provided the following projections regarding the cash rate trajectory:
ANZ: Expect the RBA to implement two cash rate cuts, bringing the rate down to approximately 3.85% by mid-2025.
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Commonwealth Bank (CBA): Anticipates four rate cuts, with the cash rate decreasing to around 3.35% by the end of 2025.
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Westpac: Predicts four rate cuts, resulting in a cash rate of about 3.35% by the end of 2025.
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National Australia Bank (NAB): Foresees five rate cuts, lowering the cash rate to approximately 3.10% by the end of 2025.
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These projections are contingent upon various economic factors, including ongoing inflation trends, detailed employment data, and current global financial conditions. The Reserve Bank of Australia (RBA) has emphasized that any decision to reduce interest rates significantly will depend on inflation effectively returning to its targeted range of 2% and 3%.
It's important to note that while forecasts provide valuable guidance and insights, actual rate decisions will ultimately be based on the ongoing and evolving economic data and conditions that emerge over time.
In this competitive market, some lenders currently offer attractive fixed interest rates below the prevailing variable interest rates, and these favourable rates can be locked in for the next two years. If you would like to learn more about these opportunities and how they could benefit your financial situation, please do not hesitate to book a complimentary 30-minute discovery call with us.
