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The Reserve Bank of Australia (RBA) will cut interest rates by 0.5 percentage points when its board next meets, National Australia Bank (NAB) predicts, as it forecasts a cash rate of 2.6 per cent by February next year.
The cash rate is currently at 4.10 per cent after the RBA’s board made a 0.25 percentage point cut . It will next meet in May after .
NAB’s economics team also predicted standard 0.25 percentage point cuts in July, August, and November, stating that a restrictive policy stance from the RBA was “no longer appropriate”.
Sally Auld, NAB chief economist, said: “Headwinds from the global environment have intensified, but error bounds around our forecast are large given uncertainty remains exceptionally elevated.”
“Our call for a 50bps (0.5 percentage points) easing in May reflects the fact that with the real cash rate of 1.3 per cent and policy currently restrictive, the RBA needs to play catch up,” she said.

“Once the cash rate reaches a level more consistent with a neutral policy setting, we then expect the RBA to pause for a few months before taking the cash rate into modestly accommodative territory.”

Table showing NAB's predicted rate cuts.

NAB is predicting a double rate cut in May, with estimations that rates will lower to 2.60 per cent by February 2026. Source: SBS News

Could Trump’s tariffs lead to more RBA cuts?

Earlier this month, the RBA at 4.10 per cent, denying borrowers back-to-back mortgage relief after its .
But after United States President Donald Trump implemented sweeping global tariffs, markets around the world witnessed their worst trading day since 2020, with .
The economic uncertainty had some experts predicting rate cuts, while could reduce the chances of a cut when the RBA meets again in mid-May.
RBA governor Michele Bullock is expected to speak on Thursday evening for the first time since the economic turmoil.

Bullock previously noted the central bank was concerned that uncertainty over Trump’s tariffs could lead to slower economic growth.

What are other big banks predicting?

  • ANZ: Predicts three more cuts, taking the cash rate to 3.35 per cent by August.
  • CBA: Predicts a cut each quarter, taking the cash rate to 3.35 per cent by the end of the year.
  • Westpac: Predicts a cut each quarter, taking the cash rate to 3.35 per cent by the end of the year.
  • NAB: Predicts five cuts (including a double in May), taking the cash rate to 2.60 per cent by February 2026.
A table showing cash rates the big four banks are predicting.

The rest of the ‘big four’ banks are predicting the cash rate to reach 3.35 per cent by next February. Source: SBS News

How much could it save you?

According to financial comparison site Canstar, a 0.5 percentage point cut would mean the monthly repayments on a $600,000 mortgage drop by $181.

If NAB’s forecast were to come true, with five more cuts through to the first quarter of next year, then the total drop in monthly repayments could be an estimated $526.

A chart showing how much NAB's predicted cash rate could save people with mortgages.

If NAB’s predicted cash rate comes to fruition, some households could save over $300 a month. Source: SBS News

‘Difficult’ to see a double rate cut

Sally Tindall, data insights director at Canstar, said while a double rate cut couldn’t be ruled out, it was unlikely.

“A cash rate cut in May is a live option on the back of an evolving global trade war and a double cut, while unlikely, can’t be ruled out,” she said.

“That said, it’s difficult to see the data-driven RBA firing off a double cut when it next meets in May. The highly methodical central bank usually likes to take time to see how volatile events play out in the Australian economy,” Tindall said.
“The RBA has previously said it would be hesitant to fire off rate cuts in quick succession; however, the reduction in the number of times the board meets could push it into making decisions earlier than it previously would.”
Tindall encouraged Australians to keep a “calm and level head” despite rising economic uncertainty.
 For the latest from SBS News, and .
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