Bendigo Bank has warned that one more cash rate hike is still on the cards this year, while CBA has sketched in dates for the first cuts in 2027.
Bendigo Bank chief economist David Robertson and the Commonwealth Bank of Australia (CBA) have set out their cash rate forecasts, with both expecting the Reserve Bank of Australia to hold at its August meeting, yet taking slightly different views on whether the tightening cycle has peaked and when easing is likely to begin.
Robertson said the RBA’s decision to leave the cash rate unchanged in June underscored the board’s determination to deliver both price stability and full employment and its willingness to act again if inflation did not moderate as hoped.
In the near term, Bendigo’s base case is that borrowers will get a brief reprieve at the next meeting.
“It’s our prediction here at Bendigo Bank that Aussie home owners will be able to catch their breath in August, with recent economic data pointing to a hold at the RBA’s next meeting,” Robertson said and pointed to the latest activity and inflation readings.
He said that the labour market remained firm and inflation only partly tamed, keeping pressure on the “price stability” side of the mandate.
Robertson said that some inflation drivers had eased, particularly oil prices and shipping disruptions, yet added that the RBA was still tilted towards caution.
“This doesn’t necessarily mean the RBA needs to tighten rates further, as oil prices have moderated and more ships make their way through the Strait of Hormuz,” he said.
“Our view remains the tightening bias will continue throughout the new financial year, with the risk of one more hike around year end, with recent talk of rate cuts next year appearing premature.”
CBA: Cycle peak reached, cuts pencilled in for 2027
Meanwhile, CBA’s latest cash rate commentary struck a different tone, with the bank saying that the current level of 4.35 per cent marked the high‑water point of the cycle.
“We continue to expect the RBA will remain on hold through the rest of 2026. While the outlook for underlying inflation remains too high, upside risks have eased given lower energy prices and the MoU between the US and Iran,” CBA said.
“We also expect economic growth to falter and the unemployment rate to lift, providing the rationale for the central bank to remain on the sideline from here.”
CBA’s reading of the RBA’s June minutes is that another near‑term increase would require a meaningful upside surprise in both inflation and growth.
“The Minutes of the June meeting suggest to us a rate hike is not imminent. We expect it would take more persistent inflation and signs the economy is not slowing as expected to bring the RBA back to the hiking table,” the bank said.
“There are risks further tightening will be required late this year if growth is more resilient and inflation more persistent.”
Looking beyond this year, CBA is one of the few forecasters willing to nominate likely timing for the first moves lower.
“Beyond 2026, we see two rate cuts on the agenda for 2027. The most likely timing for rate cuts at this stage is May and August,” it said.
[Related: Majors say RBA minutes strike ‘hawkish’ tone]
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