NAB Just Reversed Its Rate Forecast.

NAB has changed its call. The bank that was forecasting a rate hike in August now expects the next cash rate move to be a cut, with the cash rate falling to 3.6% by the end of 2027. It's the first of the big four to break from the hawkish consensus.

The shift came after Q1 GDP data showed slowing momentum, and NAB's own business survey indicated economic growth may have peaked for the cycle. Chief economist Sally Auld put it plainly: "The next move in the cash rate is likely to be down, but the timing is uncertain." Meanwhile, Westpac still expects a 25-basis-point hike in August. CBA and ANZ expect the RBA to hold when the board meets on 15 June.

When the big four disagree, pricing diverges

For 18 months, the major banks broadly agreed: rates were going up, and staying there. When lenders share the same outlook, they price accordingly. Margins stay tight. There's little incentive for any individual lender to move first.

That consensus just cracked.

When the outlook splits, lenders start making different bets on where rates land. Some will begin pricing in future cuts to attract volume. Others will hold, waiting for the RBA to confirm the turn. The gap between early movers and holdouts creates a wider spread across the market. That spread is where borrowers find sharper rates.

This plays out at every level. If your lender is pricing off a rates-stay-high view, you're being quoted a different number than someone whose lender is pricing off a cuts-are-coming view. Same borrower. Same risk profile. Different rate.

Headline inflation fell from 4.6% to 4.2% in April, and the direction is clear, even though trimmed mean inflation at 3.4% is still above the RBA's 2-3% target band. NAB itself expects core inflation to stay above target through mid-2027. Rate cuts are months away, even on the dovish reading. But lenders price to where they think rates are going, not just where they are.

What this means in practice

The practical move isn't to wait for a cut. Rate reductions are priced in by lenders before they happen, not after. If you're sitting on a rate that was set when every bank expected hikes, it may already be stale compared to what's available from lenders pricing a different outlook.

This is a window where comparison has more value than usual. The spread between the highest and lowest rates on offer for the same loan type tends to widen when banks disagree on direction. That's happening now.

For business owners who've been holding off on a vehicle or equipment purchase because the rate environment felt hostile: the question has changed. It's no longer about whether the ceiling gets higher. It's about when it starts coming down, and which lenders move first.

This article is general information only and is not financial advice.