Westpac predicts seven interest rate cuts, but not before more pain for households
Westpac has forecast interest rates will be cut seven times over 2024 and 2025, but not before more hikes heap further pain on households.
The big four bank expects the cash rate to peak at 4.1 per cent in May - up from its previous predicted high of 3.85 per cent - and remain at the same level until December, before gradually dropping to 2.35 per cent in September 2025.
The Reserve Bank of Australia this month lifted the cash rate to 3.35 per cent, the ninth consecutive rise.
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Westpac is lifting its peak cash rate prediction from 3.85 to 4.1 per cent in May 2023. AP
Westpac's board previously forecast there would be a pause in the interest rate lifting in April but due to higher-than-estimated inflation, their prediction has shifted.
"The RBA seems locked in to further hikes in the cash rate in both March and April," Westpac chief economist Bill Evans said in the bank's weekly report.
"The revised forecasts and March quarter inflation report are likely to require a further hike in May."
Evans predicted the cash rate sitting at 4.1 per cent would be "deeply contradictory" and a pause in the lifting of the rate would be appropriate.
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The banks says mortgage holders can expect relief in March 2024, when the cash rate is predicted to begin dropping. Peter Rae
Evans wrote he didn't believe the cash rate would drop before the March quarter of 2024.
"Westpac concurs and expects that the next move in rates beyond mid–2023 will be the beginning of an easing cycle in the March quarter 2024," the report reads.
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