SYDNEY, March 18, 2026, 08:38 AEDT
Westpac Banking Corp shares closed 1.39% higher at A$41.49 on Tuesday after the Reserve Bank of Australia raised the cash rate by 25 basis points, or a quarter of a percentage point, to 4.10% in a split decision. 1
The move matters because higher policy rates can help lenders defend net interest margin — the spread between what they earn on loans and pay on deposits — while the RBA’s 5-4 vote sharpened the question of whether March was a one-off or the start of another round of tightening. Commonwealth Bank economist Belinda Allen said “the domestic data flow alone justified a rate hike today,” while Westpac chief economist Luci Ellis said a May follow-up looked “less certain.” 2
Westpac also moved quickly on pricing. The bank said it would raise variable home loan rates by 25 basis points for new and existing customers from March 31, and lift its Westpac Life savings rate with bonus interest to 4.75% from March 27. Carolyn McCann, Westpac’s consumer chief, said overseas conflict was creating “uncertain times” for customers and urged borrowers under pressure to contact the bank early. 3
Westpac was not alone. Commonwealth Bank, National Australia Bank and ANZ all said on March 17 they would pass the full 25-basis-point increase on to variable-rate home loan customers, with changes taking effect on March 27, underlining how quickly the sector reprices after an RBA move. 4
That helps explain why the stock is still trading close to the record A$42.13 it touched in February. Westpac reported first-quarter net profit of A$1.9 billion last month, above analysts’ expectations, after adding A$12 billion in deposits and A$22 billion in new loans. Chief Executive Anthony Miller said he was “optimistic on the outlook” and expected demand for household and business credit to stay resilient. 5
The March rate call was not always seen as a done deal. Less than a week ago, three of the Big Four banks — including Westpac — had shifted to expect a March increase after hawkish comments from RBA Deputy Governor Andrew Hauser, and Deutsche Bank economist Phil O’Donaghoe said “our base case now is for a hike.” 6
Still, there is a catch. Higher mortgage pricing can support earnings, but it also raises the risk of weaker household demand and future credit stress if oil-driven inflation lingers. Westpac’s latest market outlook warned of a more volatile backdrop with lower growth and higher inflation, while its March consumer sentiment survey stayed below 100 — a sign pessimists still outnumber optimists — and late-week responses were consistent with a reading of just 84. 7
Westpac finished at A$41.49 after trading between A$41.00 and A$41.50 on Tuesday. The next test is whether oil holds above $100 and keeps investors focused on central banks, from Sydney to Washington. 8
