iscover 
The big four banks remain divided on the end point rate of the current rate-easing cycle.
The chief economist of National Australia Bank (NAB), Sally Auld, said the major bank expects the Reserve Bank of Australia (RBA) to be “firmly on hold” before a final cut in May 2026, but that “risks are skewed to a 3.6 per cent terminal cash rate for the cycle”.
Her comments come after the RBA voted unanimously to hold the cash rate steady at 3.60 per cent for November.
Underlying inflation will keep climbing to hit 3.2 per cent for the December 2025 quarter, before easing in the second half of 2026, the RBA forecast.
The rate hold comes less than a week after underlying inflation accelerated to 3.0 per cent for the September quarter, to reach the top of the RBA’s 2–3 per cent target band.
Auld noted that the RBA has also made “meaningful upward revisions” to inflation forecasts.
The RBA revised its cash rate forecast on Tuesday (4 November), now expecting inflation to be above 3 per cent for much of the next year before declining to around the middle of its 2–3 per cent target range by late 2027. Underlying inflation will keep climbing to hit 3.2 per cent for the December 2025 quarter, before easing in the second half of 2026.
“On net, the RBA’s delivery of a soft landing still stands, but the combination of trend GDP growth, full employment and core inflation sustainably in the target band now takes longer to achieve,” Auld said.
“Against that backdrop, the RBA will be in no hurry to adjust rates in any direction.”
Australia and New Zealand Banking Group’s(ANZ) head of Australian economics, Adam Boyton, noted uncertainty in the timing of the next rate drop.
“Our view remains that a final 25bp easing in the first half of 2026 is the most likely path for monetary policy,” Boyton said.
“That said, there is a risk that the final rate cut we expect in February could end up occurring later (possibly May, after the next two quarterly CPIs).”
AMP deputy chief economist Diana Mousina said she viewed the cash rate as a “little restrictive” based on the best estimates that we have of where neutral interest rates should be.
She added: “But the bottom line is that, don’t expect many interest rate reductions from here.
“This could be good news for those trying to get into the housing market. Home prices have been on a tear, with prices rising by 1.1 per cent in October, the fastest increase since June 2023.
“We had expected another strong year of home price growth in 2026 between 8–10 per cent but it could be a bit slower as we are likely to get less rate cuts.”
Last week, several banks changed their cash rate forecasts for the coming months, including the Commonwealth Bank of Australia (CBA) and Westpac, after the higher-than-expected inflation print.
CBA suggested that it is the end of the rate-easing cycle, having previously predicted February 2026 as the next and final rate cut of this cycle.
Westpac, previously the only major to not rule out a November rate cut, also updated its cash rate outlook for a hold.
Commenting on the interest rate decision, Treasurer Jim Chalmers said: “Inflation is much lower than we inherited, that has given the Reserve Bank the confidence to cut interest rates three times this year, and that reflects the substantial progress we’ve made together in our economy.”
[Related: RBA stays the course for Cup Day decision]
