NAB changes call, sees RBA cutting rates faster and deeper

SYDNEY, April 10 (Reuters) - In a dovish change of call, analysts at National Australia Bank now expect the Reserve Bank of Australia to cut interest rates much faster and deeper given the risks to global growth from U.S. tariffs.

NAB expects the RBA will cut its 4.1% cash rate by an outsized 50 basis points at its meeting on May 18, and then cut by 25 basis points at meetings in July, August, November and February to take rates to 2.6%. That compares to its earlier forecast for rates to fall to 3.1% by February 2026.

"Risks to both global and domestic growth have shifted to the downside," said NAB group chief economist Sally Auld. "Against this backdrop, a restrictive policy stance in Australia is no longer appropriate."

She noted the situation with tariffs remained fluid and the RBA could have scope to go slower should U.S. President Donald Trump temper the levies, as he did on Wednesday.

"But for now, we think the distribution of risks to both growth and inflation in Australia have shifted such that the central bank is required to act with some sense of urgency," Auld said.

The RBA eased by a quarter point in February, the first reduction since November 2020, but paused this month to await further evidence that inflation was slowing as desired.