RBA Interest Rate Cut Imminent? Commonwealth Bank Says ‘Done Deal’

“Interest rate cuts may be closer than we think“. Commonwealth Bank of Australia (CBAUF) says it’s already a “done deal.” That’s a bold claim. But it comes with reasons. Right now, Australia’s economy is slowing down. People are spending less. Inflation is cooling off. Job growth isn’t strong. These are the signs central banks usually watch. And when things slow too much, they cut rates.

CBA thinks the Reserve Bank of Australia (RBA) won’t wait any longer. They expect a rate cut very soon, maybe at the next meeting. Why is this a big deal? Because interest rates affect all of us. It includes home loans to savings accounts, even the stock market reacts.

Let’s have a look at CBA’s forecast, what the RBA might do, and what it means for us. 

Commonwealth Bank’s Statement and Prediction

In April 2025, the Commonwealth Bank of Australia (CBA) declared that a rate cut by the Reserve Bank of Australia (RBA) is a “done deal.” CBA thinks the RBA will cut the cash rate soon. They believe the economy is slowing down. Inflation is also falling. These signs make a rate cut more likely.

This prediction aligns with CBA’s recent forecasts, which have accurately anticipated previous RBA decisions. It also bolsters their credibility in economic forecasting.​

Economic Indicators Fueling Rate Cut Expectations

Several economic indicators support the expectation of a rate cut:​

• Australia’s GDP growth has decelerated, reflecting reduced economic activity.​
• Consumers are spending less, and savings rates have declined. This indicates financial strain on households.​
• Job vacancies have decreased, and employment growth has slowed. It suggests a weakening labor market.​
• Inflation has moderated, with recent data showing it within the RBA’s 2-3% target range.
• International factors, such as China’s economic slowdown and geopolitical uncertainties, are exerting additional pressure on Australia’s economy.​

RBA’s Past Stance and Recent Comments

The RBA has maintained a cautious approach to monetary policy in 2024 and 2025. Governor Michele Bullock has emphasized the importance of data-driven decisions. It mentioned that inflation is going down, but still higher than the target range.

The minutes from the RBA’s recent meetings indicate a growing confidence that inflation is moving sustainably towards the target. This suggests a potential shift towards easing monetary policy.

Implications for Borrowers and Investors

A rate cut would have several implications:​

• Lower interest rates would reduce mortgage repayments and provide relief to homeowners.​
• Equities, particularly in interest-sensitive sectors like real estate and banking, may experience positive momentum.​
• The Australian dollar could weaken, and affect import costs and international purchasing power.​
• Bond yields may decline. It influences investment strategies and portfolio allocations.​

Critics and Alternative Views

Not all economists agree with the prediction of an imminent rate cut. Some argue that core inflation remains elevated, particularly in the services sector, and caution against premature easing. 

Some worry about a housing bubble. Others question if lowering rates will fix long-term economic problems. These concerns suggest the RBA may keep interest rates steady.

Wrap Up

The Commonwealth Bank’s prediction of a rate cut shows rising expectations for easier monetary policy. However, the RBA will rely on upcoming data to decide when and how much to change rates.

As we approach the next RBA meeting, all eyes will be on the central bank’s assessment of inflation, employment, and global economic conditions.​

Frequently Asked Questions (FAQs)

Disclaimer:

This content is for informational purposes only and not financial advice. Always conduct your own research. For the latest updates, refer to official RBA sources.