Sydney, Jan 27, 2026, 17:21 AEDT — Market closed
- Westpac shares closed 0.6% higher at A$38.96, bouncing around between A$38.73 and A$39.20 during the session.
- Australia’s quarterly CPI inflation figures are set for release Wednesday, with rate expectations heating up ahead of next week’s RBA meeting.
- Westpac will release its first-quarter results in February, providing another key update in the near term.
Shares of Westpac Banking Corp (ASX:WBC) ended Tuesday up 0.6%, closing at A$38.96 as investors picked bank stocks ahead of Australia’s inflation data. ANZ climbed 1.1%, National Australia Bank added 1.3%, though Westpac remained shy of its 52-week peak at A$41.00.
All eyes are on Wednesday at 11:30 a.m. AEDT, when the Australian Bureau of Statistics releases the Consumer Price Index (CPI). As the key measure of inflation, any unexpected moves in the CPI could rapidly alter forecasts for the next interest rate decision.
Westpac senior economist Pat Bustamante pointed out the market’s nervousness. “Markets have now priced in two full rate hikes this year, with around a 60% probability of a hike when the RBA next meets,” he noted in a morning report, describing the Q4 inflation data as “a significant risk event.” Westpac IQ
These probabilities are derived from interest-rate futures and swaps — instruments investors use either to hedge or speculate on the Reserve Bank’s upcoming decision. A single data release can shift them, especially when traders sense the central bank is nearing a policy shift.
Bank shares are sensitive to this because interest rates affect funding costs and the net interest margin—the difference between what lenders earn on loans and pay on deposits. While higher rates can boost that margin in some cases, they also risk squeezing borrowers and pushing up credit losses if households begin to struggle.
The Reserve Bank of Australia’s Monetary Policy Board is set to meet Feb. 2-3, with its decision statement scheduled for 2:30 p.m. AEDT on Feb. 3, per the official calendar. The key domestic data ahead of this is Wednesday’s CPI release.
Investors are also eyeing earnings season closely, searching for updates on deposit pricing, bad debts, and mortgage competition beyond central bank moves. Westpac has its first-quarter results set for Feb. 13, according to its investor calendar.
Westpac didn’t release any new earnings info on Tuesday, so its stock mostly moved on broader macro trends and sector shifts. But a big move in rates markets could shake things up fast.
The setup works both ways. If inflation comes in hotter than expected, bond yields could climb, strengthening the case for an RBA rate hike. That might rattle bank shares as concerns over mortgage stress and credit quality rise. On the flip side, a softer inflation figure could spark speculation that interest rates have peaked sooner, benefiting borrowers but clouding the outlook for bank margins.
Wednesday’s CPI figures drop at 11:30 a.m. AEDT. Then, all eyes turn to the RBA’s Feb. 3 decision. Westpac’s quarterly earnings arrive shortly after, on Feb. 13.
