Sydney, May 12, 2026, 07:13 AEST
Westpac Banking Corporation said spending across its customer data panel slowed in the first quarter even as fuel outlays surged, a fresh sign Australians are moving money around rather than spending freely. Average customer spend rose 0.6% from the prior quarter and 6.5% from a year earlier; excluding fuel, spending rose 0.5%, down from 1.5% in the fourth quarter. Savings balances kept rising, but more slowly, and mortgage buffers were starting to erode, the bank said.
The update lands after the Reserve Bank of Australia lifted the cash rate target to 4.35%, making loans more costly for households and businesses. Westpac’s economics team still expects two more RBA increases this year, now in August and September, not June and August. The cash rate is the central bank’s benchmark rate and feeds into loan and savings rates.
Westpac Chief Economist Luci Ellis wrote that a June move was no longer the base case because the RBA may want to pause after three hikes and watch how the Middle East conflict plays out. “We adjust the timing of our rates view given the RBA’s language and forecasts,” Ellis wrote. The bank said the key risk is “second-round” inflation, where higher fuel and energy costs spread into wider prices such as goods, services and home-building. Westpac
That puts Westpac at the hawkish end of the major-bank pack. Mortgage Professional Australia reported that NAB expects one 25-basis-point hike in June and then a hold, while Commonwealth Bank and ANZ expect the cash rate to stay at 4.35% for the rest of 2026. A basis point is one-hundredth of a percentage point. Canstar data insights director Sally Tindall said Westpac’s revised call would give borrowers “more time to prepare,” but warned some had “little breathing room” left. Mortgage Professional
Westpac has already moved its own pricing after the RBA decision. The bank said variable home loan rates for new and existing customers would rise by 0.25% a year from May 15, while some deposit rates would also increase. Carolyn McCann, Westpac’s chief executive for consumer banking, said the Middle East conflict “continues to create global uncertainty and impact inflation.” Westpac
The bank entered this stretch with profits and capital still in shape, but with pressure building. Westpac reported A$3.4 billion in statutory net profit for the March half, up 3% from a year earlier and down 5% from the prior half, and declared a 77-cent interim dividend. Reuters said the result missed consensus as higher credit-impairment charges — money set aside for loans that may sour — and weaker treasury income weighed; Chief Executive Anthony Miller said Westpac had taken a “prudent approach” to provisions. Westpac
But the path is not locked in. If fuel prices fall faster or firms reverse cost increases, the RBA could wait longer than Westpac expects. If the conflict keeps energy costs high, borrowers with thin buffers may shift from slower saving into outright drawdowns.
Westpac shares had not yet begun normal trading in Sydney at the timestamp of this report. The ASX cash market’s normal session runs from 10 a.m. to 4 p.m. Sydney time on business days.
