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Commonwealth Bank is the only big four bank still predicting a rate cut this year, with CEO Matt Comyn warning households are finding the rate environment “harder and harder”.
The Reserve Bank of Australia’s (RBA) August cash rate hold put a dampener on many analysts’ hopes for a rate cut this year.
Westpac is currently reviewing their previous prediction that rates will fall in November, stating that RBA governor Michele Bullock’s “surprisingly hawkish” comments mean “our expectation of a November rate cut is unlikely to be achieved”.
Meanwhile, ANZ and NAB have held to their predictions that a rate cut will come in February and May 2025, respectively.
But Commonwealth Bank, Australia’s largest home lender, is still predicting a rate cut this November, with the bank’s economists forecasting the cut in its latest household spending report.
Speaking to the ABC, Comyn stated that high interest rates are taking a severe toll on Australian families.
“We’re seeing many households are obviously finding it harder and harder in the environment that we’re in with higher cost of living,” Comyn told ABC’s Peter Ryan.
“We can see that household savings have reduced substantially over the period – and this is, of course, the savings buffers that were built up during COVID.”
While his bank’s economists continue to predict a November rate cut, Comyn hedged making any calls himself, warning: “Inflation is falling, but the pace has slowed.”
Speaking to the Australian Financial Review, Comyn noted that “higher rates have had the intended effect of lowering household demand”.
His statements come in the wake of CBA’s recent FY24 results, which revealed the bank had experienced a 6 per cent decline in profits versus the year prior.
According to the bank, the fall in profits “was the result of lower lending and deposit margins driven by increased business competition and inflationary pressures in operating expenses”.
Despite the decline in profits, Comyn remained positive about Australia’s economic future in coming months, stating he was “confident about the trajectory that the economy is on”.
“We forecast GDP growth will continue to be positive and we won’t get contraction,” he said, warding off predictions of a recession.
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