Sydney, Jan 26, 2026, 16:55 AEDT — The market has closed.
- Westpac ended Friday at A$38.74, slipping 0.4%, while the ASX remained closed Monday for Australia Day.
- Traders are gearing up for Australia’s December-quarter CPI report due Wednesday, a crucial factor shaping the RBA’s rate decisions.
- Bank shares typically mirror shifts in interest-rate expectations, which have been fluctuating.
Westpac Banking Corp shares closed 0.4% lower at A$38.74 on Friday. Australia’s stock market was closed Monday for the Australia Day holiday. On Friday, the stock fluctuated between A$38.48 and A$39.00, with roughly 2.65 million shares traded. 1
The pause is significant as the next key event for bank stocks comes midweek. The Australian Bureau of Statistics will release the December-quarter consumer price index on Wednesday at 11:30 a.m. AEDT. 2
Rate bets have already begun to shift. Money markets now assign about a 60% probability to an RBA hike at February’s policy meeting following a sharp drop in December unemployment, Dow Jones reported. Still, the central bank wants clearer signals from the CPI, particularly the trimmed-mean measure — a “core” gauge that excludes the largest price swings. 3
Luci Ellis, chief economist at Westpac Group, noted that “surprisingly strong labour market data means the RBA’s February decision will (again) hinge on next week’s inflation data.” According to Westpac’s nowcast, quarterly trimmed-mean inflation stands at 0.7% (3.1% year-on-year), which Ellis suggested might be enough for the RBA to hold rates “at least for now.” 4
For Westpac and its major bank rivals, the inflation figures directly influence earnings forecasts. Investors often see the sector as a gauge for interest rates: changes in funding costs and the yield curve impact net interest margins — the gap between what banks earn on loans versus what they pay on deposits.
Higher rates can boost margins, yet they risk slowing credit growth and increasing stress on some loans. Traders have been weighing that trade-off in bank stocks all year.
Commonwealth Bank, National Australia Bank and ANZ Group typically track each other closely as the market adjusts its view on the RBA’s path, with Westpac usually following behind. Tuesday’s moves might hinge more on positioning ahead of the CPI release than on any new company developments.
But the CPI reading could swing either way. A softer figure would probably ease talk of a February rate hike and boost stocks sensitive to interest rates; a hotter result might drive yields up and stoke fears that tighter policy will strain borrowers.
The ASX kicks off trading again on Tuesday, with Wednesday’s CPI data set to be the first major domestic checkpoint. Eyes then shift fast to the Reserve Bank of Australia’s meeting on Feb. 2–3, which could mark a key turning point for Australian bank stocks. 5
