Interest rates will rise, but the first move is now more than a year away, Commonwealth Bank of Australia chief economist Michael Blythe says.
CBA's view had been that the Reserve Bank would start jacking the cash rate up in August, then follow that move with another hike before Christmas.
But in a review of the banking giant's "house view" on rates, Mr Blythe has pushed the move out to early 2016.
"It is now quite likely that the RBA continues to sit on the sidelines through 2015," he said in a report on Thursday.
The desire for a lower Australian dollar and, amid regulatory moves to restrain lending to investors, reduced concern about home prices both weakened the argument for rate rises, he said.
But Mr Blythe also downplayed the chance of interest rate cuts being predicted by some economists in late 2014.
"The rush to switch views rested on weak foundations," he said, pointing to comments by RBA governor Glenn Stevens pouring cold water on expectations that rates might soon be cut.
Falls in both consumer confidence and business confidence in early December partly reflected speculation about rate cuts, Mr Blythe said.
"It appears that households and business now equate rate cuts with bad economic news."
The big banks remain split on the outlook for rates.
In December, NAB joined Westpac in forecasting the cash rate would be cut to two per cent from its current 2.5 per cent, with both expecting the moves to begin in the first quarter of 2015.
The latest forecasts from the ANZ, issued in late November, still show the cash rate rising.
However, like the CBA's economists, the ANZ's research team pushed the timing of the first rise out further into the future, saying slower economic growth and weak inflationary pressures gave the RBA has scope to keep rates low for longer.
The ANZ is currently forecasting rate hikes to begin in November rather than May, with another hike in December, but acknowledges the possibility that rates might come down.
"We are reviewing our forecasts now but the probability that the next move in rates is down is the highest it has been in over 12 months," ANZ chief economist Warren Hogan said on Thursday.
