The Commonwealth Bank of Australia (CBA) is kind of expecting the Reserve Bank (RBA) to cut interest rates again this May. They're basing this on their latest predictions, which say the trimmed mean CPI — that's a way of looking at inflation without all the big ups and downs — is likely to rise by about 0.6% for the March quarter. If that happens, the yearly inflation would sit around 2.8%, which is actually right inside the RBA’s target zone.
And honestly, the bank’s analysts are pretty confident about it. They said something like, “If our inflation guess is right — or even a bit lower — then yeah, a May rate cut is pretty much locked in.” So yeah, they’re not being shy about that prediction.
Homeowners Could Feel Some Relief Soon
Now, if you’ve got a mortgage or some kind of home loan, this is the part you’ll probably care about most. When the RBA cut rates by 0.25% back in February, CBA quickly followed suit and lowered their variable home loan rates by the same amount. That change kicked in on Feb 28.
Angus Sullivan, who’s in charge of retail banking at CBA, said they know people are still doing it tough, especially with their household budgets. So, the bank says it wants to keep helping where it can. It’s not going to fix everything, but even a small rate drop can take some pressure off, you know?
Prices Are Moving in All Directions Right Now
The economy’s sending mixed signals, to be honest. Some prices are going up — like electricity and school fees. Electricity, in particular, jumped a lot — CBA says around 15% this quarter, mostly because some government rebates ended. Health and education costs are also rising, which isn't super surprising for this time of year.
But on the flip side, there are discounts happening in housing and holiday travel, which is helping to balance things out a bit. So while there’s inflation, it’s not completely out of control.
So, What Happens Next?
Looking ahead, CBA thinks if inflation stays on this same path, we’ll probably see that rate cut from the RBA in May. But nothing’s guaranteed. The RBA boss, Michele Bullock, has already said we’re in a bit of a weird spot economically — like, a time of “uncertainty and adjustment” — and they’re watching the numbers closely before making any big moves.
Basically, if things calm down with inflation and spending, the RBA will likely cut rates again to help out. But if prices spike or something changes fast, they might hold off.
Quick Summary: What You Should Know
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CBA’s betting on another rate cut in May 2025 if inflation behaves as expected.
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There was already a cut in February, and CBA passed that savings on to borrowers.
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Prices are up in some areas (like electricity and education), but down in others (like travel).
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Nothing’s final yet — the RBA’s waiting to see more data before deciding anything for sure.
