NAB sees economy slowing gradually, with rate cuts still ahead
Softer growth and a cooling jobs market could shape the RBA’s next move
Australia’s economy is expected to slow gradually, but NAB does not anticipate a sharp downturn, according to its latest Forward View report.
NAB expects small positive GDP growth in the June quarter, with the figures due in early September. The bank expects the data to reflect some slowing in growth during the first half of the year, while noting that the impact of the Middle East conflict has been less severe than initially feared.
Jobs growth expected to moderate
NAB expects a gradual moderation in inflation and employment, with unemployment likely to rise alongside a period of below-trend economic growth.
The softer labour market could reduce pressure on households and businesses, while easing inflation may give policymakers greater flexibility on interest rates.
RBA expected to remain on hold before cuts
NAB continues to expect the RBA to remain on hold through 2026, with the next move in interest rates likely to be lower. The bank expects a gradual normalisation of monetary policy from mid-2027.
What it means for investors
For investors, the outlook points to a slower but still expanding economy, with interest rates becoming an important driver of market sentiment.
A softer jobs market and easing inflation could eventually support rate cuts, potentially benefiting interest-rate-sensitive sectors and companies. However, weaker economic growth could also weigh on business earnings and consumer spending, making the pace of the slowdown important to watch.
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