Australian behemoth Commonwealth Bank has yielded to stronger-than-expected economic data, pushing back its forecasts for the first Reserve Bank of Australia (RBA) rate cut to December 2024.

The largest of Australia's big four banks had previously stood alone in predicting the RBA board to cut the cash rate from its 12 year-high of 4.35% in November.

Today, it took one step back and declared December a more likely target.

Comparatively, Westpac and ANZ currently expect a rate cut in February and NAB is more conservative, forecasting the first cut to come in May.

See also:Commonwealth Bank slashes home loan rates by up to 70bp

"Not all the ducks have lined up for a November rate cut," a note from CommBank head of Australian economics Gareth Aird released on Thursday afternoon reads.

"We continue to expect a more pronounced softening in the inflationary pulse over [the third quarter of 2024] compared to the RBA.

"But the August labour market data was stronger than we expected," he said.

Australia's unemployment rate held steady at 4.2% in August, ABS data published Thursday morning shows, with 47,500 jobs added to the economy that month.

CommBank had previously predicted employment to rise by 20,000.

According to Mr Aird's colleague, senior economist Belinda Allen, the jobs growth was "solely" driven by an increase in Aussies securing part-time work.

The participation rate (the portion of Australians able to work in jobs) also held steady at 76.1% – a record high, suggesting the economy likely hasn't weakened enough to warrant an RBA cash rate cut.

The RBA board began its latest hiking cycle in mid-2022 in an effort to tame runaway inflation, which is typically bolstered by low unemployment.

The latest quarterly inflation figures were in line with the RBA's forecasts, while RBA governor Michele Bullock was adamant a 2024 rate cut didn't "align with the board's current thinking" in the wake of its August hold.

The new forecast comes just hours after the US Federal Reserve dropped the world's largest economy's benchmark rate by 50 basis points to between 4.75% and 5%.

CommBank tips December RBA rate cut, notes risks of later start

Mr Aird noted that, come the RBA board's December meeting, it will have poured over inflation, wage growth, and GDP figures for the September quarter, as well as a fresh unemployment read.

"We now believe this fuller suite of data will need to be seen and assessed by the RBA board for it to be willing to join a host of other central banks in cutting rates in 2024," he said.

"The risk to our revised call for the commencement of an RBA easing cycle in December is a later start date, namely February 2025."

Cash rate to end 2025 at 3.10%: CommBank

More importantly, he noted, is the number of rate cuts to follow the board's first downward movement.

"We have made no changes to our base case for 125 basis points of policy easing by end-2025 that would take the cash rate to 3.10%," he said.

That's likely good news for embattled mortgage holders.

A 125 basis point reduction in the typical variable rate on a new home loan – 6.3% p.a. in July – would bring it down to 5.05% p.a.

Assuming a $650,000 home loan with a 30-year lifespan, that would see a borrower's monthly repayments drop by more than $500 – from around $4,020 to close to $3,510.

To learn how a rate cut could impact your home loan repayments, check out Your Mortgage's home loan repayment calculator

_{Image courtesy of the Commonwealth Bank of Australia}