Why homeowners could be forced to wait until May for a rate cut

Experts have warned that the homeowners could be forced to wait for interest rate relief in a huge blow to Anthony Albanese’s re-election hopes.

Experts have warned that the homeowners could be forced to wait until May for interest rate relief in a huge blow to Anthony Albanese’s re-election hopes.

While new inflation data was supportive for RBA rate cuts in the first half of 2025 Bendigo Bank Chief Economist David Robertson has warned it could be after the federal election.

“We continue to forecast three cuts this year although we still expect the first to be in May, by which time we hope the RBA has enough evidence to reduce rates by 35 basis points to an even 4 per cent,” he said.

However Commonwealth Bank Australia economist Stephen Wu was more optimistic, insisting relief could come “sooner rather than later.”

Prime Minister Anthony Albanese. Picture: Samuel Davis

“We are still looking for February as the start of the cutting cycle,’’ he told news.com.au.

“If you look past that increase in the headline rate its actually a good inflation report

“Our best case is still a February rate cut. In terms of the inflation front it’s looking very promising.

“The RBA has said that inflation is their key focus. With inflation pressures improving that could be sooner rather than later.”

PM has just two chances for a rate cut before the federal election

The Prime Minister has just two chances to secure an interest rate cut before the next election with the RBA set to meet on February 18 and March 31.

Both of those dates would slot in before an election on April 12 or May 3, 10 or 17 giving the PM two chances for rate relief.

But if the RBA waits until May to deliver the first interest rate cut in 2025, the PM could find himself in trouble. That meeting isn’t scheduled until May 19, which is just days after the last possible date to hold the election on May 17.

Inflation data released this week was again supportive for RBA rate cuts in the first half of 2025, although the Bendigo Bank Chief Economist David Robertson has warned it will need more constructive data in the coming weeks to put money on a February cut.

Experts predict that rate cut in early 2025 unlikely

Consumer prices rose 2.5 per cent over the past year, on a seasonally-adjusted basis, with trimmed mean inflation up 3.2 per cent.

“A rate cut in early 2025 remains unlikely, with a rate cut in May probably the earliest that households can reasonably expect rate relief,’’ APAC economist at global job site Indeed Callum Pickering said.

“While headline inflation is within the RBA’s 2-3 per cent inflation target, it is clear that inflationary pressures remain elevated once you account for government subsidies and market distortions,” said economist Callam Pickering. “Underlying inflation and persistent service sector inflation remains a concern.”

The Prime Minister has just two chances to secure an interest rate cut before the next election.

“Monthly inflation in November was higher than October in large part due to the timing of electricity rebates. Some households received two electricity rebate payments in October – artificially driving down electricity prices – while from November most households will receive just one payment.”

“It’s another reminder that Australia’s inflation figures right now are a mess, heavily influenced by government subsidies and market distortions. The headline inflation figure is practically useless from a monetary policy perspective, with the RBA correctly focusing on underlying inflation measures.”

ANZ bank more optimistic on February cut

ANZ chief economist Catherine Birch was more optimistic noting that the November monthly CPI indicator points to downside risk to our and the RBA’s Q4 trimmed mean CPI forecasts.

“This raises the probability of a February rate cut, although the resilience in the

labour market (noted in the RBA’s December minutes from 24 December) will be a key consideration,’’ she said.

“Meals out, takeaway and holiday inflation were also softer than forecast, putting downward pressure on services inflation.”

RBA should stop sitting on its hands and cut rates: ACTU

Unions warned that today’s economic figures offered further signs of a clear pathway for the Reserve Bank of Australia to start cutting official interest rates at its first policy meeting in February.

ACTU President Michele O’Neil urged the RBA to act.

Aussies could face another tough year. Picture: Brendon Thorne/Getty Images

“The RBA needs to stop sitting on their hands and start cutting interest rates from February because household budgets will take months to repair,’’ she said.

“Australia faces a real risk that the one million job gains that we have made since the change of government will be eroded.

“The RBA needs to abandon its goal to lift unemployment and stop ignoring the warning signs that interest rates need to come down.

“There’s no more time to wait, workers and their families need interest rates to fall from February.”