Rate Cut Bombshell: ANZ Predicts Cash Rate to Plunge to 3.85%, Bringing Borrower Relief

ANZ Forecasts RBA Terminal Cash Rate of 4.1% by Ma 2022 Modely: A Historical Comparison of Rate Hike Cycles Across Decades

The 2025 ANZ rate cut double projection predicts significant financial changes in Australia. Such steps will bring the cash rate down to 3.85%, setting off a chain reaction among investors, mortgage holders, and the economy as a whole. Given the commitment, Australians must comprehend how these developments affect their money.

Projects of Rate Cut by ANZ

ANZ's most recent Quarterly Research Report paints the Reserve Bank of Australia's (RBA) monetary policy situation. The research predicts an RBA rate cut in May 2025 and another in August. Each 25-basis-point drop will lower the cash rate from 4.35% to 3.85% by FY2024–25.

If inflation settles within the target range and the employment market shows indications of weakening, earlier action might be taken.

The decision to move the first cut to May rather than implement an earlier adjustment in February underscores the strength of Australia’s economy, especially in terms of the labour market's performance.

“Given the unexpected resilience of the labour market, we have adjusted the commencement of the RBA’s easing cycle from February 2025 to May 2025.” According to the report from ANZ, the outlook suggests a mere two rate reductions, each by 25 basis points.

The potential for a cut in February 2025 continues to be a viable option. If inflation aligns with the target range and the labour market exhibits signs of easing, an earlier adjustment may be on the horizon.

World Economic Trends and Local Consequences

ANZ projects a stable economy worldwide, with most significant areas avoiding recession. Important players in this perspective are:

Resilient private sector balance sheets: Households and companies are financially steady, lowering recession threats.

China's structural changes will likely increase the world economy, helping trading partners like Australia.

Temporary political disturbances: Global political unrest, including the impact of the Trump administration, is considered disruptive but not long-term damaging.

Recent tax cuts have supported consumer confidence, showing signs of improvement on the home front. As families adjust to bettering economic conditions, ANZ expects this momentum to last throughout early 2025.

What It Means for Borrowers and Investors

Expected rate cuts provide much-needed breath to mortgage holders. The lowered rates exert small monthly payments, easing house buyers in finding houses priced at a relatively lower cost. Similarly, with reduced borrowing rates, property investors can scout newer opportunities as higher demand becomes visible in the housing market.

ANZ warns against relying too heavily on rate cuts. A well-thought-out plan that includes government steps and business changes will stabilise the economy.

Forecasting Future Events

These changes call on Australians to review their financial plans immediately. Whether it's renegotiating current debt, locking in a cheaper rate, or investigating fresh investment prospects, preparedness is crucial.

These upcoming rate cuts have the potential to alter the situation significantly, so prepare for the cash rate drop with confidence: lower rates mean higher opportunities. 

With RBA rate cuts ahead, now’s the time to act. Connect with OM Financial Services and find out how to leverage these changes for your financial growth.

We'll help you secure your future with expert advice. Let’s turn this opportunity into your success.

Book a free chat to OM Financials.