SYDNEY, March 18, 2026, 08:38 AEDT
Westpac Banking Corp finished Tuesday up 1.39% at A$41.49, as the Reserve Bank of Australia opted for a split decision to boost the cash rate by 25 basis points—taking it to 4.10%.
Why does it matter? Higher policy rates let banks protect their net interest margins—the difference between income from loans and what’s paid out on deposits. The RBA’s narrow 5-4 vote reopens the debate: was March just a blip, or does it signal the start of more hikes? “The domestic data flow alone justified a rate hike today,” Commonwealth Bank’s Belinda Allen said. For May, though, Westpac’s Luci Ellis called another move “less certain.” Reuters
Westpac wasted little time adjusting its rates. The bank plans to hike variable home loan rates by 25 basis points for both new and existing borrowers starting March 31, and will boost its Westpac Life savings rate—including the bonus interest—to 4.75% from March 27. Carolyn McCann, who heads Westpac’s consumer division, pointed to overseas conflict fueling “uncertain times” for customers, and encouraged those feeling financial stress to reach out early. Westpac
Westpac wasn’t the only one. On March 17, Commonwealth Bank, National Australia Bank, and ANZ each announced they’d match the full 25-basis-point hike for variable-rate home loan customers. The new rates kick in March 27, a sign of just how swiftly lenders move to reprice after an RBA shift.
That’s part of the reason shares remain just shy of that A$42.13 record from February. In the first quarter, Westpac posted a net profit of A$1.9 billion—beating what analysts had penciled in—after pulling in A$12 billion in fresh deposits and booking A$22 billion worth of new loans. Chief Executive Anthony Miller described himself as “optimistic on the outlook,” saying he anticipates steady demand for both household and business credit. Reuters
The March rate decision wasn’t always locked in. Just days ago, three of the Big Four banks—Westpac among them—pivoted to forecast a March hike, spurred by hawkish remarks from RBA Deputy Governor Andrew Hauser. “Our base case now is for a hike,” said Deutsche Bank’s Phil O’Donaghoe. Reuters
There’s a hitch, though. While charging more for mortgages can lift earnings, it also means households could pull back, especially if oil-fueled inflation sticks around and starts to bite, raising future credit risks. Westpac’s most recent market outlook flagged a shakier environment — slower growth, inflation running hotter. The consumer sentiment survey for March didn’t budge above 100, so pessimists are still the majority. By the end of the week, responses pointed to a reading as low as 84.
Westpac settled at A$41.49, having moved in a tight A$41.00 to A$41.50 range Tuesday. Attention now shifts to oil: if it stays above $100, investor focus remains sharply fixed on central banks in Sydney, Washington, and beyond.
