[Hot Topic] NAB tips interest rate cut in surprise forecast reversal

The Reserve Bank is widely tipped to hold interest rates next week, but one of the nation’s biggest lenders argues a cooling economy will force the RBA’s next move to be a cut – though the timing remains uncertain.

Just a week out from the RBA’s June 16 cash rate decision, NAB has scrapped its previous expectation of another rate hike and says borrowing costs are now headed in the opposite direction.

Rates staying on hold or eventually coming down will be welcome news after three RBA hikes earlier this year, although any future cuts are likely to be aimed at supporting the economy rather than rewarding borrowers.

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NAB

NAB chief economist Dr Sally Auld said conditions looked very different to those seen during the central bank’s earlier tightening cycle.

“The next move in the cash rate is likely to be down, but the timing is uncertain. In February, growth was above trend, the economy was operating above capacity, and there was uncertainty over the restrictiveness of rates. None of these conditions exist today,” she said.

NAB’s latest RBA Watch report argues the economy has lost momentum, pointing to weaker-than-expected March quarter GDP figures.

Auld said the data suggested economic growth had already reached its peak for the current cycle.

“That said, we are cognisant there is still considerable uncertainty around the outlook, both with respect to activity and inflation.”

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16 June 2026

在这样的经济背景下，澳大利亚人仍在持续应对生活成本带来的挑战。

The economic backdrop comes as Australians continue to grapple with cost-of-living challenges.

Fresh KPMG research using Australian Bureau of Statistics data found that Australians are less satisfied with life than during the extended COVID-19 lockdowns of 2020, with inflation and higher interest rates weighing on households.

Inflation remains one of the biggest uncertainties for the RBA, with NAB still forecasting underlying inflation to remain above the central bank’s target range until the middle of 2027.

Auld said price risks had not disappeared, while a weaker labour market could also influence the path of interest rates.

“On the prices side, we are still forecasting above-target core inflation through to mid-2027. Margins will compress and weaker labour market outcomes are a risk,” she said.

The major lender also projects tighter financial conditions to cool the housing market, with Auld forecasting “tighter financial conditions will be reflected in a slowing in house price growth and housing credit growth”.

While the bank now has greater confidence that Australia’s next interest rate move will be down, it is less certain about when that will happen.

NAB anticipates the official cash rate to end 2027 at 3.6 per cent after abandoning its previous forecast for an August rate rise.

The Reserve Bank will announce its next cash rate decision at 2.30pm AEST on June 16, with economists and financial markets widely expecting rates to remain on hold.

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