Major bank predicts three interest rate cuts in 2025

NAB Group CEO Andrew Irvine has shared an optimistic outlook for 2025, forecasting three interest rate cuts throughout the year. Speaking on behalf of the major bank, Irvine said Australians should expect relief after enduring significant economic challenges in 2024.

“It’s my view that we’re at the hardest point of the economic cycle right now, and things will get better from here,” Irvine stated. He highlighted tax cuts and increased savings among Australians as positive indicators, with the first interest rate cut expected by mid-year, followed by two more later in 2025.

Irvine emphasized that strong employment levels in Australia have helped many households manage their financial burdens despite rising costs. “As long as people have jobs and income, most bills and mortgage payments are being met,” he said.

The anticipated rate cuts, he noted, will provide a much-needed psychological boost to consumers and businesses alike. “The first rate cut will have a significant impact on the psyche of consumers and businesses, fostering a positive environment for spending, growth, and employment,” Irvine added.

Small and medium enterprises (SMEs) are also expected to benefit. Irvine recognized SMEs as the backbone of Australia’s economy, pointing to strong performances in sectors like resources, energy, agriculture, and defence. However, he acknowledged that businesses targeting middle-market consumers are facing the most pressure due to shrinking margins.

Looking ahead, Irvine expressed optimism despite potential external challenges, such as geopolitical tensions and trade uncertainties. He highlighted Australia’s diversification in markets and industries as a strength. “This is a testament to the hard work of Australian businesses, and I remain confident in the resilience of our economy,” he concluded.

2025 is set to bring measured economic improvement, with interest rate cuts and renewed optimism among businesses and consumers driving positive change.

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