Interest rate relief in November no longer a given, major bank warns

Cash-strapped mortgage holders may not be getting any further interest-rate relief because of better-than-expected economic data.

ANZ’s latest economic forecasts are not good news for frustrated households.

ANZ head of Australian economics Adam Boyton warned that further rate relief may not be coming for mortgage holders.

“If evidence of consumer spending momentum continues and weakness does not emerge in the CPI or labour market data, the RBA may assess the cash rate as broadly neutral with no further cuts needed,” he said.

The update comes following a surge in consumer spending that helped lift the Australian economy over the last quarter.

The Australian economy grew 0.6 per cent across the June quarter, beating expectations of a 0.4 to 0.5 per cent lift.

Household spending propelled the pick-up, rising 0.9 per cent on the back of discretionary spending, which was up 1.4 per cent, its strongest rise in three years.

Gross domestic product (GDP) growth per capita lifted 0.2 per cent.

GDP growth hit 1.8 per cent from June 2024 to June 2025, the ABS said.

This was due to Queensland and NSW having stronger sales, as consumers replaced damaged items from extreme weather events, lifting subdued spending from the previous quarter.

“Economic growth rebounded in the June quarter following subdued growth in the March quarter, which was heavily impacted by weather events,” ABS head of national accounts Tom Lay said.

Following a speech at the Shann Memorial Lecture, RBA governor Michele Bullock warned that the pick-up in consumer spending would have an impact on interest-rate cuts if it continued.

“For some time we have been predicting the Australian consumer would spend more and they are, slowly, as they are value conscious,” she said.

“What it means for future interest rates, I don’t know at this stage, but if it’s anything, it’s a little stronger than we thought it would.” she said.

“That is good, but if it keeps going, then there may not be many interest-rate declines left to come, but it all depends.”

Despite highlighting a robust economy, Mr Boyton said his bank was still forecasting a November rate cut.

“We still think a rate cut in November is more likely than not, but the GDP figure increases the chances of there being no rate cut in November or, indeed, at all from here.”

The money market is not expecting an interest-rate cut in September and has priced in a 79 per cent chance of a rate cut in November.