Bheja AI

Key points

The RBA is expected to cut the cash rate by 25 basis points to 3.60% at its July 7–8 meeting.
A typical $600,000 loan could save $90/month, or over $1,000/year, if lenders pass on the full cut.
Utilise Bheja.ai's tools to assess your mortgage and explore refinancing options.

The Reserve Bank of Australia is widely expected to cut the cash rate by 25 basis points to 3.60% at its July 7–8 meeting. If it goes ahead, this will be Australia’s third rate cut of 2025, following reductions in February (to 4.10%) and May (to 3.85%).

Why is another RBA rate cut likely in July?

Cooling inflation: Headline CPI fell to 2.1% in May, while core inflation (trimmed mean) eased to 2.4%—its lowest level since late 2021. This sustained disinflation gives the RBA room to lower rates.
Weak economic growth: Australia’s economy grew just 0.2% quarter-on-quarter and 1.3% year-on-year in Q1, both below forecasts. The figures highlight sluggish investment and restrained government spending.
Soft retail spending: Retail sales edged up only 0.2% in May, underscoring continued weakness in household consumption and adding to the case for a July rate cut.

Wondering how this cut might affect your repayments?

How global events are influencing Australia’s cash rate decisions?

Geopolitical tensions, including the Israel–Iran conflict and rising U.S.–China trade friction, are weighing on Australia’s external outlook. Oil price swings during periods of conflict have highlighted supply chain vulnerabilities. The RBA has flagged global uncertainty as a key risk to domestic growth and stability.

Current big four bank cash rate forecasts

Bank	Next cut	Total no. cuts (2025)	Cash rate at end of cuts
CBA	8 July	2	3.35%
Westpac	8 July	4	2.85%
NAB	8 July	3	3.10%
ANZ	8 July	2	3.35%

ANZ

ANZ now expects the RBA to deliver a 25 bps cut in July, moving its forecast forward from August.

Adam Boyton, Head of Australian Economics, said a July move is the "path of least regret", noting that recent data points — particularly weak retail and construction figures — suggest the economy is underperforming.

ANZ also cut its fixed home loan rates by up to 0.35%, signalling growing confidence in the rate cut outlook.

CommBank

Expects a 25 bps rate cut in July, followed by another 25 bps in August.

“The reason for the change in our forecast really comes down to a shift in tone from the RBA at their last meeting, and since then the run of data has said to us that inflation is going to remain sustainably in the band, economic growth is a little bit weak, and consumer and business sentiment is also slightly weak,” said economist Harry Ottley.

“This week we got the final piece of the data puzzle, with the monthly CPI for May. In that, the headline CPI in the year to May came in at 2.1 per cent which was a little bit below what we and the market were expecting...Because of this, we’re now confident that the RBA won’t see the second quarter data as troublesome and will be happy to remove a bit more restrictiveness from the cash rate and deliver two more cuts this year.”

NAB

NAB Economics expects the RBA to cut the cash rate three more times in 2025 (July, August and November), taking it to 3.10%.

Consumers are already feeling some relief. NAB’s latest Consumer Sentiment Survey shows the stress index dropped to 56.6 in June, down from 59.6 in March and now sitting below its long-term average. Easing cost-of-living pressures and recent rate cuts have lifted household confidence.

NAB Executive Lucia La Bella said nearly half of mortgage holders are already feeling the benefits of lower rates.

“We’re seeing a sense of optimism about the future and more confidence that there’s light at the end of the tunnel,” she said.

Fewer Australians are seeing sharp increases in key expenses like mortgages, rent, and transport. However, cost-of-living remains a concern for household, even though it has fallen to its lowest point in three years.

Households are responding by tightening budgets. Australians are saving an average of $4,860 a year by cutting back on non-essentials like dining out, travel, and entertainment. Many are also shopping smarter—one in three are switching to cheaper brands, one in four are comparing prices, and one in ten are jumping on discounts when they see them.

Westpac

Westpac has joined the other major banks in shifting its forecast for the next RBA rate cut to July, bringing it forward from August. The move follows a softer-than-expected May inflation reading and persistent signs of weak domestic demand.

Westpac chief economist Luci Ellis acknowledged the stronger case for a near-term cut but noted the decision was not guaranteed.

“This is not the shoo-in that markets seem to think it is,” she said, pointing to the upcoming June quarter CPI data as still crucial to the RBA’s thinking.

Ellis added that while recent inflation numbers had helped ease concerns, the central bank would remain cautious, looking for sustained evidence that inflation will stay within the target band.

How much could typical home borrower save on your home loan?

Assuming:

A $600,000 mortgage
A 25-year loan term
A standard variable interest rate falling from 6.00% to 5.75%
The full 25 basis point (0.25%) cut is passed on by the lender

Monthly repayments would fall from approximately $3,865 to $3,775, delivering savings of about $90 per month, or over $1,000 a year. Borrowers with larger loans would see proportionally greater savings.