Big four bank downgrades RBA forecast for 2025: One less cut

Home loan holders might realise one less cut in 2025 than previously predicted, according to ANZ's latest outlook. 

ANZ bins forecast for July rate cut

The smallest of the big four banks previously anticipated the Reserve Bank of Australia (RBA) would cut the cash rate by 25 basis points in May, July, and August.

That would have seen it end the year at 3.35% - a full percentage point lower than it closed 2024.

However, amid US tariff tension easing, ANZ experts have dumped their forecast of a July cut, instead forecasting the cash rate to ring in the new year at 3.60%.

But not all hope is lost - the bank now expects a single, 25 basis point cut in the first quarter of 2026.

"It is now harder to see the conditions that would be required for a July cut to eventuate over the near term," ANZ said in a note on Friday.

"While there has been an impact on Australian consumer and business confidence, signs of progress in US-China trade talks have reduced the risk of a global shock having a more pronounced and immediate impact."

Despite revising its longer-term forecast, ANZ continues to expect a 25 basis point cut next week, bringing the cash rate down from 4.10% to 3.85%.

One bank bucks the trend

Among the big four, NAB remains the outlier, forecasting a larger, 50 basis point cut this Tuesday.

"NAB's RBA view is that a deterioration in the global backdrop would see the RBA move more quickly, starting with a 50 basis point cut next week," said NAB senior markets economist Taylor Nugent.

"[This would] both offset downward pressure on the outlook for growth and inflation, and … better position policy for a shifted balance of risks."

Such a move could shave more than $190 off monthly repayments on a $600,000 variable home loan (assuming a 6% starting rate), potentially saving borrowers nearly $2,300 annually.

Following the anticipated May cut, NAB also forecasts further 25 basis point reductions in July, August, November, and February - which would see the cash rate fall to 2.6% by mid-2026.

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