Westpac forecasts RBA rate cut of 0.25% in May

Westpac analysts forecast the Reserve Bank of Australia (RBA) to cut interest rates by 0.25% to 3.85% during the next meeting in May. Experts' expectations are based on weak labor market performance and volatile global conditions, Investing reports.

Westpac’s chief economist Luci Ellis believes that the RBA will cut rates even if inflation for the first quarter of 2025 is higher than expected. Supporting GDP growth and stabilizing the labor market are now key for the central bank. This should help the Australian economy to remain resilient against the negative effect of US import tariffs.

According to Westpac's forecast, there will be three more rate cuts by the RBA this year: in May, August, and November. Ellis considers a more rapid and large-scale reduction in borrowing costs unlikely, but does not rule it out completely. Such a scenario may be relevant if global trade tensions persist or intensify, Investing notes.