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Interest rate forecast and predictions for 2025
Following a cash rate hold in July, home loan borrowers may be wondering what happens next – here are the current cash rate predictions proffered by the big banks, speculating as to where the Reserve Bank of Australia (RBA) may go from here.
09 July 2025
Following a cash rate hold in July, home loan borrowers may be wondering what happens next – here are the current cash rate predictions proffered by the big banks, speculating as to where the Reserve Bank of Australia (RBA) may go from here.
What is happening with the cash rate?
The Reserve Bank of Australia (RBA) defied the predictions of economists at the nation’s big four banks by holding the cash rate steady at 3.85 at its July meeting, depriving variable-rate home loan borrowers of a long-anticipated cut.
After several years of steep hikes, and a year without movement in 2024, the central bank finally began lowering rates at the beginning of 2025, with a 25 basis point cut in February and another in May.
Will Australians see rate cuts in 2025?
All eyes will be on the RBA when the board meets again in August, with the next cash rate call set to happen on Tuesday 12th. Even though inflation is within the bank’s target band, it remains to be seen whether they’ll deliver more relief to borrowers.
Calling the May rate cut a “welcome relief” for Aussie borrowers, Federal Treasurer Jim Chalmers said that “the market has expected for some time that there would be multiple interest rate cuts this year.”
“That is a matter for the independent Reserve Bank, and it’s a matter for the market and for the economists to make those sorts of assessments,” he continued.
“The market expects there to be further interest rate cuts, but market expectations change over time.”
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What are the big four banks’ cash rate predictions?
Here’s what the nation’s big four banks have to say about the RBA’s predicted movements for the remainder of 2025 and into 2026:
- ANZ predicts a 25 basis point cut in August and another in November, taking the cash rate to 3.35% by the end of 2025.
- CBA predicts a 25 basis point cut in August and another in November, taking the cash rate to 3.35% by the end of 2025.
- NAB predicts 25 basis point cuts in August and November, and another in February, taking the cash rate to 3.10% by the beginning of 2026.
- Westpac predicts 25 basis point cuts in August and November, and another in February, taking the cash rate to 3.10% by the beginning of 2026.
Where the RBA board formerly met on the first Tuesday of each month, excluding January, it now meets eight times a year, for two days at a time. This means that the RBA’s next cash rate announcement is due on Tuesday August 12 at 2.30pm.
Will interest rates rise again in 2025?
At this stage, it appears unlikely that rates will rise again in 2025, but this does not mean that more cuts are imminent either, and the RBA may yet continue to hold the cash rate at its current level at future meetings.
When making monetary policy, one of the RBA’s key goals is the maintenance of full employment in Australia, in order to maintain the overall strength of the nation’s financial system, and recent jobs figures have been strong.
Recent ABS figures show that Australia’s employment participation rate was 67.0% in April of 2025, relatively steady relative to the month before and just down from a record high of 67.2% in September.
That said, the RBA also keeps an eye on inflation, with a clear directive that the cash rate will only be cut when it believes the level of inflation will remain in the target 2% – 3% band.
Will Trump’s tariffs affect interest rates in Australia?
While it’s too soon to tell what affect US president Donald Trump’s tariffs will have on Australian interest rates, the RBA’s board has said that it has modelled the impact of ‘trade war’ and ‘trade peace’ scenarios.
In its May 2025 Statement on Monetary Policy, the board of the RBA said that “a slowing in global growth is expected to result in reduced demand for Australian exports and lower export prices, though these impacts will be mitigated by Chinese fiscal stimulus.”
Governor Michele Bullock said that the current situation for Australia “not just uncertain, it’s actually unpredictable” and so that the range of outcomes from an international trade war could be “quite wide.”
How can I compare home loans?
If you’re looking for a low fixed or variable rate for a new home loan or a refinance, you can compare home loans with Canstar to see if you can find a lender offering a deal that meets your needs and circumstances.
If you’re considering refinancing from a variable rate to a fixed one, it may also be worth considering the pros and cons of fixing your home loan, and considering the current interest rates on home loans to see how fixed and variable rate loans stack up. You might also want to consider some of the home loan refinancing deals that might be available.
Cover image source: fizkes/Shutterstock.com.
This article was reviewed by our Editor-in-Chief Nina Rinella before it was updated, as part of our fact-checking process.
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