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All four major banks expect the central bank to cut the cash rate several times this year, with ANZ suggesting the RBA will move earlier to quell economic turbulence from US tariffs.
Australia and New Zealand Banking Group (ANZ) has brought forward its forecast for the next rate cut to May, meaning all four major banks believe the Reserve Bank of Australia (RBA) will reduce the cash rate next month to 3.85 per cent - and several times after that.
The change in ANZ’s forecast comes after US President Donald Trump announced a raft of global tariffs on Thursday (3 April) - including a 10 per cent tariff on Australian goods - which has caused widespread upset on global markets.
Noting the move, ANZ’s economics team said that while the US does not buy particularly large amounts of Australian exports (and the two countries may yet negotiate the tariff down), the main risks for the Australian economy centre around the implications for global growth and domestic consumer and business confidence.
The ANZ economics team noted: “On the information we have to hand, the market reaction and past RBA responses to global shocks, more aggressive RBA easing now seems more likely than not.”
It now expects the RBA to reduce the cash rate several times this year given the likely impacts on global growth and those already evident in market sentiment.
It is now suggesting the RBA will ease in May, July and August (25 basis points at each meeting). This would see the cash rate drop to 3.35 per cent in four months’ time.
Moreover, ANZ’s economics team would “not rule out a 50bp cut in May, if sentiment sours and the global growth outlook deteriorates sufficiently”.
”While the RBA does not target market sentiment…conditions that give rise to negative market sentiment often see RBA easing,” they said in the Australian Macro Weekly report on Friday morning (4 April).
“Additional easing from the RBA would offset much of the risk that a deterioration in confidence flows through to weaker consumer spending and business investment.”
The other three major banks have not yet announced changes to their longer term forecasts following the tariff announcement, meaning that all of them expect four rate cuts this year, taking the cash rate to 3.35 per cent by December.
National Australia Bank (NAB) also expects another rate cut in the first quarter of 2026.
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