At its meeting today 20th May 2025, the RBA Board decided to lower the cash rate target by 25 basis points to 3.85 per cent.
All four major banks expect the Reserve Bank to deliver further rate relief, though their forecasts diverge on how rates will evolve over the coming months.
ANZ predicts two additional cuts after today’s move, lowering the cash rate to 3.35% by August. Commonwealth Bank and Westpac share the same year-end forecast but anticipate a more gradual decline.
NAB, however, foresees a larger cut today, followed by smaller reductions in July, August, November, and February, ultimately bringing the cash rate down to 2.6%.
Could a Depression Occur in 2030?
Economic forecasts about a potential depression in the 2030s vary. Some analysts, such as ITR Economics, warn of a high likelihood of a Great Depression-like event between 2030 and 2036, driven by factors like demographic changes, debt burdens, and technological upheaval.
However, other experts argue that proactive government policies, economic adaptability, and global cooperation could mitigate such a severe downturn. While risks exist, the full severity—and even the certainty—of a 2030s depression remains debated.
Do interest rates fall during a recession?
Yes, interest rates typically decline in a recession. Central banks usually cut rates to stimulate economic growth during downturns, encouraging borrowing and spending to boost activity.
Following the RBA’s decision to decrease the official cash rate by 0.25% p.a., CBA will decrease home loan variable interest rates by 0.25% p.a., effective Friday 30 May 2025.
