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When Rates Will Drop

When Rates Will Drop

The Commonwealth Bank is tipping a drop in interest rates of nearly 1 percentage point by the second half of 2024.

CBA chief economist Stephen Halmarick, believes cuts will start in September 2024, dropping rates to 3.6%. He also predicts a further 75 basis point drop in 2025 when inflation sits within the Reserve Bank of Australia’s target of 2% to 3%. This he says will bring the cash rate back to 2.85%.

“Markets have shifted to our view that the global monetary policy tightening cycle is at an end and that 2024 will see interest rate cuts from some of the major central banks, especially the US Federal Reserve and the RBA,” Halmarick says.

Halmarick says the pace of global inflation began to slow in mid-2023 and he expects that to happen even further this year.

In November 2023 the RBA’s Statement on Monetary Policy predicted that the level of inflation would fall to 4% by June 2024.


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