Westpac shares rebound after inflation cools — here’s what markets watch next

Sydney, Jan 8, 2026, 17:23 AEDT — Market closed

Westpac rose 1.3% on Thursday after two straight declines
RBA officials signalled inflation is easing but still above target
Focus shifts to Jan 28 CPI and Westpac’s Feb 13 quarterly update

Westpac Banking Corp shares (WBC.AX) last traded at A$38.01, up 1.3% on Thursday, paring losses from earlier in the week as investors weighed softer inflation against a still-wary central bank tone. Intelligent Investor

The move matters because Australia’s big banks have been trading day-to-day as a proxy for the interest-rate path. Data showed annual consumer inflation slowed to 3.4% in November from 3.8% in October, while the trimmed mean — a core measure that strips out big price swings — eased to 3.2%. The next major read, December-quarter CPI, is due on Jan. 28. Australian Bureau of Statistics

Reserve Bank of Australia Deputy Governor Andrew Hauser said inflation “above 3%” was still “too high”, according to an ABC interview cited by Reuters, and noted policymakers would look at the broader economy rather than hang a decision on any single print. The cash rate is 3.6%. Reuters

Westpac chief economist Luci Ellis called the inflation outcome a “very pleasant surprise” in comments carried by ABC, while warning the numbers have been noisy, including around electricity rebates rolling on and off. ABC

Bank stocks had been under pressure after the CPI release, with Westpac shedding 1.8% on Wednesday as investors sold rate-sensitive names, ABC’s market coverage showed. National Australia Bank fell 2% the same session, the report said. ABC

Westpac has swung hard this week. It fell 2.2% on Tuesday and 1.75% on Wednesday, before Thursday’s bounce, with A$37.52 marking a near-term floor traders have been leaning on. The stock was back below A$39, an area it traded around early in the week. Stockanalysis

Broader rate signals have also been shifting. Australian bond yields eased again on Thursday after the CPI print, according to MarketIndex commentary, a move that tends to feed straight into bets on what the RBA does next. Marketindex

But there’s a catch. If the next inflation round runs hot, rate-hike talk comes back quickly and bank stocks can get clipped again on valuation, even as higher rates can lift margins. If inflation cools faster than expected, the debate flips — and investors start asking how long bank earnings can lean on wide spreads.

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As a journalist focused on finance and the stock market, he delivers fast, reliable, and easy-to-understand coverage of market news.

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