SYDNEY, April 1, 2026, 09:02 AEDT
Westpac Banking Corp has shifted its outlook, now anticipating the Reserve Bank of Australia will raise the cash rate three more times—May, June, and August—pushing it up to 4.85%. The bank is flagging fallout from Middle East fuel disruptions as a driver behind the higher price forecasts. “We now expect the RBA to hike in June and August as well as May,” chief economist Luci Ellis said. Westpac is penciling in headline inflation at 5.4% for the June quarter, with its preferred trimmed mean measure landing near 4% later this year. Unemployment, Westpac projects, could edge up to around 5%, with no cuts to rates seen before 2028. As for the government’s temporary fuel excise cut, Ellis noted it would offer a short-term break on headline inflation, but won’t shift the bigger inflation trend. 1
Westpac customers are set to face higher variable mortgage rates starting March 31, after the bank pushed through the RBA’s recent 25-basis-point hike. With borrowers already dealing with steeper repayments, the latest forecast goes beyond just a market prediction. 2
Westpac is outpacing its rivals. On March 24, NAB reiterated it had “not made any changes” to its outlook, still calling for one last quarter-point hike in May. ANZ’s March 27 update pointed to the cash rate topping out at 4.35% by June and staying put through year-end. 3
Markets and the central bank aren’t rushing in. Reuters said traders now put the odds of a May hike at just 60%, and they’re pricing in roughly 65 basis points of additional tightening for the rest of 2026. March meeting minutes showed board members mostly agreed another hike would probably be necessary, but they couldn’t settle on when. Oil hovering near $100 a barrel could bump headline inflation up to 5% for the June quarter—up from February’s 3.7%. 4
Westpac’s latest decision is already being felt. On March 17, the bank announced it will hike variable home-loan rates for both new and existing borrowers by 25 basis points from March 31. The bonus rate for its Westpac Life savings account will also go up, reaching 4.75%. Consumer division head Carolyn McCann pointed to the impact of the overseas conflict on “inflation and cost of living”. 5
Westpac wraps up its financial half on March 31, with interim results and the dividend set for release May 5. 6
Westpac heads into the reporting stretch with a fairly sturdy earnings platform. Back in February, Reuters flagged that the bank’s unaudited first-quarter net profit had climbed to A$1.9 billion, driven by growth in both deposits and loans. Still, intensifying competition continued to put pressure on the net interest margin—the gap between what Westpac earns on loans and pays out on deposits. 7
Still, there’s room for the curve to flatten if energy prices cool down or if the disruption ends up being briefer than Westpac has forecast. Following the March meeting, Governor Michele Bullock described the board’s disagreement as a matter of “timing rather than direction”—some had argued for delaying a move until May, waiting for more data. Back then, Ellis told Reuters a subsequent hike seemed “less certain,” hinging on how the conflict played out. 8
