Westpac has doubled down on its call that the cash rate will rise in August and September this year, and says borrowers should not expect cuts until 2028. The bank’s latest forecast keeps it firmly out of step with rivals that now see the next move as lower rates, not higher ones.
The timing matters because households and mortgage holders are watching every bank forecast for clues about when relief might come. Westpac’s stance, reaffirmed today, suggests the fight against inflation is not yet over and that the cost of borrowing could stay elevated for years longer than many had hoped.
At the centre of that view is economist Luci Ellis, who said inflation would peak at 4.7% late this year. Ellis said that would leave inflation lower than she previously expected, but still above where the Reserve Bank now expects it to land. That is the basis for Westpac’s belief that the central bank still has more work to do before it can think about easing.
It is a stark contrast with the latest calls from other major lenders. ANZ now expects two cash rate cuts in 2027. Commonwealth Bank sees the Reserve Bank staying on hold before cutting twice in mid-2027, and NAB expects a similar path. HSBC’s Paul Bloxham goes even later, saying there should be no change until cuts arrive in late 2027.
Bloxham argues the Reserve Bank has already done a lot to curb the surge in inflation and said the bank is likely to be on hold in June. He added that while another hike remains a risk, weakening growth should persuade the board to stay put. Financial markets are still leaning the other way, betting a hike is more likely than not over the next 12 months.
That leaves the Reserve Bank’s June decision as the next real test, followed by the August and September meetings that Westpac is clearly watching most closely. If the central bank does not raise rates at those points, Westpac’s forecast will look increasingly isolated; if it does, borrowers could be facing a longer stretch of expensive mortgages than the other banks are now pricing in.
