by Sanjeev Sah | Feb 25, 2025 | Market Updates

NAB is the last of the big four banks to bring forward its cash rate cut forecast to February but maintains that the rate reduction cycle will be one of gradual easing.  

The bank said the Reserve Bank of Australia’s cautiously optimistic stance in December,  and the softer outlook on key inflation components, are unlikely to be compelling enough to make markets change their expectations and aggressively price in interest rate cuts. 

“We believe that, despite its resilience, current labour market dynamics are not inflationary. The RBA’s re-assessment of labour market tightness in February will be a critical consideration in monetary policy, as will their revised inflation outlook.” 

NAB expects GDP growth to pick up to about 2.25% between 2025 and 2026  as a result of improving consumer spending. Furthermore, underlying inflation is expected to moderate further and re-enter the RBA’s target band as early as Q1 2025. 

For property investors, this signals a potentially favourable shift in market conditions; if interest rates do decline, borrowing costs will ease, improving cash flow for investors and increasing demand for property.