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Westpac sees RBA holding firm through 2026 as inflation risks linger. Cuts seen in 2027.
Key Takeaways (30s Read)
Westpac forecasts that the RBA will hold rates firm through 2026 amid lingering inflation risks.
Westpac's economic forecast indicates that the Reserve Bank of Australia (RBA) is expected to hold interest rates steady through 2026. While inflation is easing, the pace is insufficient to alter the RBA's current stance. The bank also notes that rate cuts could occur in early 2027, contingent on the evolution of inflation and labor market dynamics.
Risks from the labor market deterioration suggest potential for earlier rate cuts, yet any talk of further hikes is deemed premature. The Australian economy shows signs of recovery, particularly in the private sector, contributing to hopes for continuous demand growth heading into 2026.
AI Analyst
AI Opinion
"Westpac's outlook provides key insights into the RBA's interest rate strategy. Maintaining rates through 2026 signals ongoing inflation risks, suggesting that policy changes are unlikely unless significant shifts occur in economic conditions. The interplay between labor market trends and private sector recovery will be critical for future rate forecasts, but the RBA's vigilance towards potential inflation remains strong. Market participants must remain attentive to how the RBA may respond in the coming years, leaving uncertainty clouding the interest rate policy through 2027."
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