A stronger-than-expected jobs market has led ANZ to push back its forecast for an early Reserve Bank interest rate cut.
ANZ continues to expect two rate cuts of 25 basis points each in 2016, which would push the cash rate to a new record low of 1.5 per cent.
However, it says, it no longer expects the central bank to move on rates in February.
Instead, it now anticipates the RBA will deliver its first cut in May, and another in August.
The bank says it has revised its forecast following two months of strong jobs data and positive business sentiment.
"The recent run of positive data on the labour market and business surveys precludes the RBA from moving as early as February, as originally anticipated," ANZ said on Monday.
However, it said a softening housing sector was a key factor as to why it still expected two rate cuts in 2016.
A weaker housing sector, higher capital requirements for lenders, less stimulus from the depreciating Australian dollar, and soft global growth would put the brakes on the local economy, it said.
"Combined with a subdued global economy, a weak business investment outlook, and the possibility that banks will need to implement further out-of-cycle mortgage rate increases to offset higher capital funding requirements, we continue to believe that the economy will require some additional support in 2016," ANZ said.
The national unemployment rate dropped to 5.8 per cent in November, the lowest level in almost two years and the total number of people with a job rose 71,400 in the month.
This was on top of a gain of more than 56,000 in October, making it the strongest two-month period of jobs growth since the late 1980s, official figures released last week showed.
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