ANZ has drastically cut its interest rate forecasts for next year, citing a sharp weakening in the mining sector, higher unemployment and the strong dollar as the rationale behind a drop of 100 basis points.

ANZ had forecast the Reserve Bank of Australia’s official cash rate to stay on hold at 3 per cent for all of 2013, but is now predicting a 25 basis point cut in each quarter, ending 2013 at 2 per cent. Among major banking institutions, ANZ now has the lowest forecast for interest rates, along with Macquarie Bank.

Economists fear a rise in unemployment. Credit:Andrew Quilty

The RBA, earlier this month, cut interest rates by 25 basis points, to 3 per cent, their lowest levels since the global financial crisis. If rates were to be cut by 100 basis points, they would reach a new Australian low.

‘‘It’s probably been evolving for a little while,’’ said Ivan Colhoun, ANZ head of economics & property research. ‘‘Since the RBA’s board meeting and the NAB business survey, we’ve been reviewing our forecasts.’’