If you’re a homeowner or property investor, May could bring good news. According to fresh forecasts from the Commonwealth Bank (CBA), a cut to the Reserve Bank of Australia’s (RBA) cash rate is now looking like a “done deal.”
What’s Behind the Forecast?
Australia’s Official Cash Rate:
CBA’s latest economic update suggests that headline inflation will drop to 2.3%, near the bottom of the RBA’s 2–3% target range. Even more importantly, the trimmed mean inflation — the measure the RBA uses when making rate decisions — is expected to increase by just 0.6% for the March quarter, resulting in an annual rate of 2.8%.
This would keep inflation well within the RBA’s target band, giving it room to ease pressure on borrowers.
CBA Senior Economist Stephen Wu stated:
“If the trimmed mean CPI is in line with our forecast (or below), then we consider a rate cut in May is a done deal.”
What Would This Mean for You?
A 25 basis point rate cut would lower the official cash rate to 3.85%, down from the current 4.10%. For a homeowner with a $600,000 mortgage, this could translate to savings of approximately $91 per month.
While the RBA held rates steady in April, it flagged May as a key opportunity to reassess monetary policy. The RBA is awaiting new data on inflation, wages, employment, and broader economic trends, with the March quarter CPI due out on April 30.
What Are the Other Banks Saying?
- Westpac also expects a 25 basis point rate cut in May, noting that while inflation is ticking up slightly, it remains broadly in line with forecasts.
- NAB had previously predicted a double rate cut in May, but later softened that view after the U.S. paused new tariffs for 90 days.
What to Watch For
The key figure to watch is the March quarter trimmed mean CPI. If it comes in at or below 0.6%, the chances of a May rate cut rise significantly.
Labour market data has also been steady, with only minimal changes to unemployment — another sign that conditions are suitable for a potential rate cut.
Need Help Understanding What a Rate Cut Means for You?
What Should You Do Now?
Lower interest rates mean cheaper borrowing costs, which can benefit you whether you’re:
- Refinancing a home loan
- Investing in property
- Looking to improve cash flow in your business
Whether you’re a homeowner, investor, or just keeping an eye on how interest rates might impact your financial plans, now is the perfect time to get expert guidance.
At Boa & Co. Chartered Accountants, we can help you assess how these upcoming changes may affect your tax, lending, and overall financial strategy. Whether it’s reviewing your current mortgage or planning ahead for June 30, we’re here to help.
Call us on 1300 952 286,
Email [email protected],
Or visit www.boanco.com.au to book your consultation.