Australia’s interest rate landscape remains in sharp focus as the Reserve Bank of Australia (RBA) prepares for its upcoming policy decision. With households navigating cost-of-living pressures and businesses adjusting to tighter financial conditions, attention now turns to whether monetary easing will continue—or pause—for the time being.
The direction of interest rates carries significant weight for the broader economy, affecting everything from mortgage repayments to consumer spending and corporate investment. As major banks revise their forecasts for the months ahead, Tuesday’s meeting will offer a critical signal of the RBA’s stance in a year shaped by cautious optimism and shifting financial dynamics.
Signals of Stability From the Reserve Bank
The Reserve Bank of Australia (RBA) is preparing for its second monetary policy meeting of the year, with its decision due at 2:30pm AEDT on Tuesday, April 1. Following a surprise rate cut in February—reducing the cash rate target by 25 basis points to 4.1%—expectations for another immediate move remain low.
According to reporting from ABC News, most of the country’s major banks anticipate the RBA will hold rates steady this week. While the Commonwealth Bank, NAB, ANZ, and Westpac all forecast further reductions later in 2025, the near-term outlook suggests a pause.
NAB has flagged the possibility of a cut either this week or at the May meeting, but this view remains in the minority.
The cash rate target directly influences lending rates set by commercial banks, although the impact on consumer loans is not automatic. Changes in the RBA’s monetary stance typically guide broader economic expectations, particularly around inflation control and household spending.
Diverging Forecasts Among the Big Four Banks
There is growing consensus among economists that further easing of monetary policy is likely in the months ahead. The major banks differ slightly in their timelines and expectations, though all agree that rates are headed lower.
ANZ projects one additional rate cut in 2025, not before August, with a cash rate forecast of 3.85% by then. The Commonwealth Bank expects two more cuts, bringing the rate down to 3.35% by December.
Both NAB and Westpac anticipate three cuts over the course of the year, also seeing the rate fall to 3.35%, though Westpac places the final adjustment in November.
The current 4.1% rate was last observed in October 2023, where it remained unchanged for four months. The RBA’s approach has been measured, meeting only eight times annually since it moved from a monthly schedule.
The next policy discussions are scheduled for May, July, August, September, November, and December, although some dates may shift to avoid clashes with public events such as the Melbourne Cup.
