NAB chief economist expects the Reserve Bank of Australia to start cutting interest rates in May next year

According to Jinshi Data, NAB chief economist Alan Oster said that although high interest rates are affecting the Australian economy, the Reserve Bank of Australia may not start to cut the official cash rate until May next year.

Core inflation is expected to fall to 3.5% by the end of 2024, but will not return to the 2%-3% target range until the end of 2025.

Once it starts, the RBA will cut interest rates by about 125 basis points within a year, bringing interest rates back to a neutral level of around 3.10% from the current 4.35%. This outlook still implies a soft landing for the economy and a gradual easing of the cash rate back to a neutral level.