Cash cuts could end in November
- September 17, 2025
- Posted by: mpinvest
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CBA says rate reductions in 2026 not likely
Mortgage holders and investors could be in for another rate cut in November. But that may mark the end of the current easing cycle, according to Commonwealth Bank (CBA).
While the major bank has previously forecasted further monetary easing into 2026, CBA now expects November’s cut to be the final one.
“There’s a risk on the 2026 cut. But the base case is for just one more cut in November,” Harry Ottley, economist at CBA, told Australian Broker. “The economy is picking up a little bit more quickly than expected. And as a result, there’ll just be less rate cuts needed.”
CBA is anticipating a 25-basis point reduction at the November meeting.
Meanwhile, the Reserve Bank of Australia (RBA) cut the official cash rate (OCR) in August — the third reduction in 2025 — bringing it down to 3.60%. The falling rates have been a welcome relief to mortgage holders and property investors alike, many of whom have been grappling with cost-of-living pressures amid a national housing shortage and soaring property prices.
However, the nation’s central bank was quick to note that it has adopted a wait-and-see approach, signaling that any further monetary policy decisions will depend on upcoming economic data. This suggests inflation and employment are tracking within manageable levels, with the RBA reaffirming its target inflation range of 2% to 3%.
The June quarterly consumer price index (CPI) confirmed that inflation continues to trend downward. Both headline CPI and trimmed mean inflation declined over the quarter, with annual CPI easing to 2.1%, down from 2.4% in the previous period, while trimmed mean inflation dipped to 2.7%, compared with 2.9% in the prior quarter. In addition, the nation’s unemployment rate remains historically low at 4.2%.
Earlier this month, however, RBA Governor Michele Bullock suggested that stronger-than-expected consumer spending could add to inflationary pressures and delay further interest rate cuts.
“We are seeing [increased consumer spending] come back, and that’s welcome,” Bullock said. “What it means for future interest rates, I don’t know. All I would say is that, if anything, it’s probably a little stronger than we thought it would be.
“That’s good, but it does mean that it’s possible that if it keeps going, then there may not be any interest rate declines yet to come. But it all depends,the governor added.
Consumer spending Down Under rose 2 points during the last week of August, according to the latest ANZ-Roy Morgan Survey, only to fall more than 3 points the week ending 14 September.
The RBA’s next meeting is scheduled for 29-30 September.
Resource: brokernews.com.au