They joined a rising chorus of economists and investors who believe a rate cut at the central bank board's next meeting is all but assured.
After declaring their stance was under review following a surprisingly soft inflation print from the Australian Bureau of Statistics, NAB on Thursday said the confirmation of weaker than forecast price growth and a softer outlook for housing costs had caused them to change their tune.
Lower than expected underlying inflation could bring some relief, with rate cuts likely. (Lukas Coch/AAP PHOTOS)
"The fourth-quarter CPI confirms that inflation has moderated more quickly than the RBA expected and sets up a likely downward revision to the inflation profile in the February statement on monetary policy," NAB chief economist Alan Oster said.
"This now makes February the most likely starting point for a gradual easing in interest rates."
Treasurer Jim Chalmers called Wednesday's numbers "really encouraging" in showing that Australia had made substantial and sustained progress in the fight against inflation.
Trimmed mean inflation - the RBA's preferred measure because it smooths out volatile price changes - came in at 0.5 per cent for the December quarter, below market and RBA expectations.
That put the six-month annualised figure for underlying inflation at 2.7 per cent, tantalisingly near the mid-point of the Reserve Bank's 2-3 per cent target band, and should help allay the RBA's fears that low unemployment and high government spending would lead to price growth kicking off again.
Federal Treasurer Jim Chalmers says lower inflation numbers were 'really encouraging'. (Jono Searle/AAP PHOTOS)
"Australians are on the cusp of achieving something pretty remarkable together," Dr Chalmers told ABC Radio.
"And that is, if you look around the world, a lot of countries have had to pay for the kind of progress that we're making on inflation with much higher unemployment.
"And what we've been able to do here in Australia is get inflation down and wages up and keep unemployment low, and that's not the usual economic orthodoxy, and that's not what we're seeing in every part of the developed world."
With money markets pricing in a 95 per cent chance of a February cut, the question now for many investors and mortgage holders is not when but how many cuts the RBA will deliver them.
Importantly, the number of rate cuts expected by the market in 2025 also rose, with traders expecting at least three 25-basis-point cuts this calendar year.
That aligns with the prediction of AMP's deputy chief economist Diana Mousina, who expects the cash rate to end 2025 at 3.6 per cent.
Mr Oster predicted only a "gradual" easing phase, but NAB still expected 100 basis points of cuts in 2025.
"While the board is likely to have gained confidence that inflation will sustainably return to target as soon as late 2025, the labour market remains resilient (and there is some risk of re-tightening) with growth still expected to pick up this year," he said.
The RBA, led by governor Michele Bullock, is widely expected to begin cutting rates from February. (Bianca De Marchi/AAP PHOTOS)
CBA head of Australian economics Gareth Aird also predicted four 25bp cuts in 2025, which would leave the cash rate at 3.35 per cent at year's end.
"This is a touch below the RBA's estimate of the nominal neutral cash rate, which is centred on a point estimate of 3.5 per cent," Mr Aird said.
Shadow treasurer Angus Taylor said people were still feeling a lot of pain and there was a long way to go before getting back to where they were a couple of years ago.
"Even on the government's plan, Australians' standard of living isn't going to get back to where it was when Labor came to power until 2030," he told Nine's Today Show.
"For the treasurer to declare victory at this point suggests to me that he really doesn't understand what's going on in Australian households and businesses."
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