The Commonwealth Bank, Australia's biggest lender, is forecasting six
interest rate cuts in 2024 and 2025 starting in September this year.
They also expect dwelling prices to rise a further 5% in 2024.
The CBA's head of Australian Economics, Gareth Aird, says the recent
rise in unemployment will force the RBA to take action to avoid a blowout in
jobless numbers.
"Our base case sees the RBA commence an easing cycle in September 2024
(75 basis points of rate cuts by end-2024 and a further 75 basis points of cuts
in H1 2025,” Aird said.
This would take the RBA cash rate back to 3.6 per cent in the second
half of 2024 for the first time since May 2023 - down from an existing 12-year
high of 4.35 per cent, and down to 2.85 per cent by mid-2025.
The latest Australian Bureau of Statistics data showed our unemployment
rate has risen to 4.1 per cent as 22,000 people left the employment pool in
January.
The seasonally adjusted unemployment rate rose by 0.1 percentage point
to the highest point it has been in two years.
Aird says the CBA expect the unemployment rate is heading for 4.5 per
cent in coming months unless interest rates are reduced to encourage economic
growth.
CBA expects the unemployment rate will rise to 4.5 per cent by the end
of 2024, which is higher than the RBA’s current forecast of 4.3 per cent.
"We believe RBA cuts will be required this year to prevent the
unemployment rate from rising much above 4.5 per cent," he said
CBA had previously predicted three rate cuts by the end of
2024 and another three rate cuts in the second half of 2025. This update brings
the second trio of rate cuts forward to the first half of next year.
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Jason Gwerder
Wednesday, 28 February 2024
