Reserve Bank of Australia (RBA) to convene their second meeting in 2025 this week. This meeting has created unusual excitement and anticipation around potential changes in interest rates. The RBA, which holds eight meetings annually, will announce its decision on whether to cut the cash rate target at 2:30 pm AEDT on Tuesday. The Reserve Bank’s cash rate target is currently 4.1 percent where it has remained for the past four months. Financial analysts and large investment banks are hungrily following the developments as they happen.
Importance of the Cash Rate Target
The RBA’s cash rate target plays a crucial role in setting borrowing costs. It has a direct impact on the rates that commercial banks themselves charge their customers. A reduction in the cash rate target flows through to lower interest rates for borrowers and depositors, helping to spark economic activity. The RBA raised its cash rate target by 25 basis points in February. Fast-forward to today, when affected stakeholders now look ahead to the next NEPA meeting and hope that there are more reductions on the way.
Future Meeting Dates and Potential Adjustments
In 2025, the RBA will be meeting on the following important dates. These are February 17-18, March 31-April 1, May 19-20, July 7-8, August 11-12, September 29-30, November 3-4 and December 8-9. The November meeting is likely to be moved so that it does not fall on Melbourne Cup Day on November 4. As the RBA had signalled last year, not all meeting dates were a foregone conclusion.
Major Banks’ Predictions and Expectations
Australia’s major banks are closely monitoring the RBA’s decisions and have made their own predictions regarding future rate cuts. In fact, ANZ is forecasting one more cut—in August, while the Commonwealth Bank is expecting two more cuts by next May. NAB now expects at least three additional cuts this quarter, or by the May meeting. In the opposite corner, Westpac is still predicting three more cuts to come, with them occurring over the June quarter. These bearish predictions are a sign that banks may be strategically planning ahead for changes in monetary policy.
