NAB Group Chief Economist Sally Auld (pictured) said the bank now expects the RBA to keep the cash rate on hold at 3.6% “for an extended period” as the economy rebalances amid sticky inflation and tight capacity.
“We no longer expect the RBA to make a final cash rate cut in May 2026,” Auld said. “We now see the cash rate on hold at 3.6% for an extended period.”
Auld said NAB had slightly lowered its near-term GDP forecast to around 2% year-on-year, with unemployment expected to remain steady at 4.4%. She pointed to three main factors behind the change — persistent inflation, stronger private-sector growth, and rising investor activity.
“Recent data on prices suggests the strong likelihood that underlying inflation will print above 3% for the next couple of quarters,” she said in NAB's monetary policy update. “While some of the pick-up is expected to be transitory, underlying inflation is still forecast to remain in the top half of the target band for an extended period.”
Auld also noted signs of stronger momentum in private-sector growth, with capacity utilisation now around two percentage points above its long-run average.
“There is little to no spare capacity in the economy, which highlights the risk that price pressures could re-emerge as the ongoing recovery flows through to the labour market,” she said.
Investor activity has also accelerated, with new investor loan approvals rising 14% and the total value of loans up 18% in the three months to September — a level Auld said “would historically demand a policy response, macro-prudential or otherwise.”
The move aligns NAB with CBA, which dropped its final forecast cut on Oct. 29, citing stubborn inflation after the September quarter CPI came in hotter than expected. By contrast, ANZ still expects one more RBA cut in February 2026, while Westpac anticipates two further reductions in May and August 2026, Canstar reported.
Australia’s fifth-largest lender, Macquarie Bank, has raised its fixed home loan rates by up to 0.20 percentage points, following Westpac’s decision to lift rates this week by as much as 0.35 percentage points.
As a result, Macquarie no longer has any fixed rate beginning with a "4". Its lowest fixed rate is now 5.19% for both 1- and 2-year terms, available only to borrowers with at least a 30% deposit.
Macquarie’s move reflects a broader recalibration among lenders as inflation concerns persist and the path of monetary policy becomes less certain.
With two of the big four banks now expecting the RBA cash rate to remain on hold at 3.6%, borrowers seeking relief are being urged to shop around.
Latest data from Canstar.com.au shows:
5.52% — average outstanding variable rate for owner-occupiers
5.08% — lowest variable rate available for refinancers
4.74% — lowest fixed rate available for both two- and three-year terms
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