URGENT UPDATE: Westpac Banking Corp has just announced a significant shift in predictions regarding the Reserve Bank of Australia’s (RBA) interest rate decisions, following a surprising rise in the unemployment rate. As the RBA’s next meeting approaches in early November, homeowners and borrowers are left anxiously awaiting critical developments.
In a new report, Westpac highlights that the Australian employment landscape is weaker than the RBA’s projections. This unexpected downturn raises the likelihood of a rate cut next month, with market expectations shifting rapidly. The probability of a 25 basis point rate cut in November has surged from 40% to an impressive 78%.
Westpac analysts emphasize that the upcoming Consumer Price Index (CPI) report, due on October 29, will be a decisive factor in the RBA’s decision-making process. The report could potentially confirm the need for a rate cut, given the current condition of the job market.
Westpac’s economic team stated,
“Compared to the RBA’s August forecasts, employment is already on a weaker footing, and the unemployment rate now looks likely to overshoot their projections.”
This statement underscores the urgency felt by stakeholders as they navigate the uncertain economic landscape.
Currently, Westpac anticipates one more interest rate cut before the end of 2025, reducing the cash rate to 3.35%. The bank further forecasts a drop to 3.10% by March 2026 and 2.85% by June 2026. This outlook suggests a prolonged period of lower rates, which could provide much-needed relief for borrowers.
Contrastingly, market forecasts appear less certain. The latest data from the ASX 30 Day Interbank Cash Rate Futures indicates only a 44% chance of the RBA lowering rates to 3.35% in November. Market analysts expect a 3.25% cash rate by the end of next year, a prediction that diverges from Westpac’s more aggressive outlook.
As the situation develops, it remains to be seen whether Westpac or the market will prove to be more accurate in their predictions. However, what is clear is that potential rate cuts could ease financial pressures for many Australian homeowners.
Stay tuned as we await the CPI report and the RBA’s upcoming decisions, which could reshape the economic landscape in Australia. The implications of these developments are profound and will undoubtedly affect millions across the nation.
