Westpac Warns Inflation Fight Is Not Over as Rate Rise Looms
Australia’s inflation battle is far from over, with a major bank warning that further interest rate rises may be needed despite growing concerns about jobs and businesses.
Westpac chief executive Anthony Miller said the Reserve Bank of Australia (RBA) was likely to continue raising rates to bring inflation under control.
“We’re seeing the Reserve Bank very actively go after that challenge,” he said, noting that four rate increases had already occurred this year, with one or two more possible.
Westpac reported an annual net profit of $6.8 billion for the year ending September 30, down 1 per cent. Its cash profit, excluding one-off items, reached $7 billion, while its full-year dividend was $1.54 per share.
The results were announced ahead of Tuesday’s expected RBA decision, with financial markets anticipating the cash rate could rise to 4.85 per cent.
According to the Australian Financial Review, the increase could add more than $6,000 a year to repayments on an average mortgage. Mortgage costs for households with a median-priced home would reach their highest share of income since the 1980s.
RBA Governor Michele Bullock said in September that the board would raise rates again if necessary to reduce inflation.
However, political leaders have raised concerns about the economic consequences.
Prime Minister Anthony Albanese recently described interest rate increases as a “blunt instrument”. NSW Premier Chris Minns also warned that another rise could lead to job losses and business closures.
“I don’t think this is a straightforward decision,” Minns told reporters on Monday, saying the impact on the NSW economy could be significant.
Miller acknowledged that this year’s rate increases, alongside Labor’s tax changes introduced in May, had affected the property market.
However, he said Australia had experienced similar downturns before and pointed to the ongoing shortage of housing as a key challenge.
He also expressed confidence in the broader economy, highlighting strong business investment.
Markets are pricing in an 82 per cent chance of another rate rise when the RBA announces its decision at 2.30pm on Tuesday, Melbourne Cup day.
Inflation remains above the central bank’s target range of 2 to 3 per cent. Annual headline inflation rose to 4.3 per cent in the year to September, exceeding expectations.
The RBA is using higher interest rates to encourage households to reduce spending, which could help slow price increases.
However, the latest figures suggest household spending has already stalled, raising concerns about the pressure further rate increases could place on families, businesses and the wider economy.
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Source : 9 News
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