iscover
iscover 
The Australian Bureau of Statistics (ABS) recently released its monthly inflation figures. With the numbers now within the RBA’s coveted 2–3 per cent range, many believe we should expect a rate cut at the central bank’s meeting on 17–18 February.
Here’s what the banks are saying:
ANZ:
Senior economist Catherine Birch said: “Trimmed mean inflation printed at 0.5 per cent q/q in Q4 2024, in line with our expectations. The annual rate fell 0.3ppt to 3.2 per cent y/y, below the RBA’s forecast of 3.4 per cent y/y. We think this will be enough for the RBA to cut the cash rate by 25bp at its February meeting.
“The RBA will likely look through headline inflation due to these temporary effects, and the impacts of other cost-of-living relief measures, but it has the benefit of bringing down future inflation for expenditure classes where prices are administered or indexed.”
NAB:
Chief economist Alan Oster, said: “We now expect the RBA to cut the cash rate by 25bps in February. We still expect the cutting phase to be gradual, with the RBA taking the cash rate down to 3.1 per cent by February 2026.
“While the board is likely to have gained confidence that inflation will sustainably return to target as soon as late 2025, the labour market remains resilient (and there is some risk of retightening) with growth still expected to pick up this year.”
Westpac:
Chief economist Luci Ellis said: “Normally it should not come down to one number. This round, however, the CPI has been the deciding factor because the message from other available data has been so mixed. We have just enough evidence to conclude that disinflation has proceeded faster than the RBA expected, so the Board will have the required confidence to start the rate-cutting phase in February.
“When we changed our call back in November to a start date of May 2025, we nonetheless assessed that a February move could not be ruled out. It was a matter of what was the most likely outcome, not what the only possible outcome was. The better-than-expected inflation data tilts the balance of probabilities back in February’s favour.
“Looking beyond the next meeting, we see the RBA as remaining data-dependent from here and not in a hurry to move further. Conditional on further declines in inflation and some softening in the labour market, we see cuts in May, August and November, taking the terminal rate to 3.35 per cent. This is in effect a reversion to our earlier call, now that it has become clearer that the economy is evolving broadly in line with our forecasts, and not the more hawkish view of domestic cost growth that would have led to further delays.”
CBA:
Chief economist Stephen Halmarick said: “The weakness in spending in December, combined with the improving inflation environment, supports our view that the RBA can begin to lower interest rates at the first meeting of the year in February. We expect 100bp of monetary policy easing through 2025.”
Bendigo and Adelaide Bank:
Chief economist David Robertson said: “The slightly lower than expected Q4 inflation data opens the door for a February RBA rate cut, and validates our forecast of three cuts in 2025.
“Even more compelling for core inflation was the monthly indicator for December where the Trimmed Mean fell to 2.7 per cent, suggesting the moderating trend for Q1 25 will continue. As a result an RBA cut on February 18 is now the most likely outcome, although we continue to suggest that this will be a shallow easing cycle, given a ‘neutral’ cash rate is 3.5 per cent.
“If the RBA do cut in February, the second cut would most likely be in May (if Q1 CPI to be released on April 30 remains benign) with other factors including jobs data and offshore developments remaining important.”
Judo Bank:
The lender is separating itself from the rest: “If monetary policy was solely about where inflation is right now, then there is a case to cut rates, particularly if the current monetary policy is considered restrictive. However, monetary policy is about where inflation is headed, and today’s inflation report only provides us with some of the information required to make that assessment.
“The primary question for monetary policy is, what will a rate cut achieve for the Australian economy? We know lower rates will add more employment and inflation to the economy. The question is whether that’s what is needed with strong employment and inflation still elevated above the RBA’s target band. This will be a judgement call for the RBA Governor and Board. Given the political backdrop, whatever the decision of the following two RBA Board meetings, the outcome will likely be contestable and subject to severe scrutiny.
“We recognise the pressure the RBA is under to deliver rate cuts and cannot rule out an easing over the next nine weeks. But the economic case is weak, and we stick with our view that the first rate cut is unlikely until later this year.”
To wrap up
While the most popular consensus seems to point to a rate cut in mid-February, nobody knows what decision the RBA will come to. All we can do is speculate, but until the meeting, the future of interest rates is up in the air.
ISCOVER 
