NAB ditches forecast for rate cuts in 2025

NAB has ditched forecasts of a further two interest rate cuts as the Reserve Bank of Australia (RBA) board prepares for next week's meeting on the cash rate.

The change came after yesterday's ABS figures showed inflation hit a 12-month high for the month of August.

The annual trimmed mean inflation, the RBA's preferred measure of underlying inflation, was at 2.6 per cent for the month.

READ MORE: Headline inflation rises to highest level in 12 months

Before the release of the data, the NAB expected two further cash rate cuts, the first in November, followed by next February.

Now it expects the RBA to leave the cash rate on hold when the central bank wraps up its meeting next Tuesday afternoon.

Last month it decided to slash the cash rate by 0.25 per cent to 3.6 per cent.

NAB now forecasts no reduction until next May.

Currently, the three other big-four banks still expect the RBA to cut the cash rate in November, but, the Commonwealth Bank yesterday acknowledged that it was "by no means guaranteed and will be highly dependent on the data flow from here."

Comparison website Canstar says the about-turn by NAB shows how quickly forecasts about the cash rate can change.

Canstar data insights director, Sally Tindall, says the inflation data has probably ruled out any reduction next week by the RBA.

"The RBA doesn't put much weight on the monthly data, but these results are difficult to ignore out of hand and the board isn't going to take risks with inflation."

She advised mortgage holders seeking lower repayment figures to go out and find a better deal on their home loan.

"An ultra-competitive variable rate for owner-occupiers is around 5.25 per cent or less, with more than 30 lenders offering at least one of these rates."

Canstar research shows an owner-occupier on a rate of 6.36 per cent with a $600,000 loan could potentially pocket more than $12,000 in just two years by switching to a competitive rate, even after accounting for refinancing costs.

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