Westpac bets on rates drop
Westpac has bucked the trend of other banks and has voiced its expectations that the Reserve Bank of Australia (RBA) will drop the cash rate by a full percentage point over the coming year.
The company has said that diminishing consumer and business confidence will drive the RBA to drop the country’s rates, despite other financial institutions expecting the rates to hold.
Westpac has said that the rate, currently at 4.75 per cent, will drop owing to an increasingly unstable global financial situation as well as local factors.
Although unemployment has remained steady at 4.9 per cent, a growing patchwork economy and a struggling small-to-medium enterprise (SME) sector will lead the RBA to reduce interest pressures.
Westpac believes that a struggling services sector, coupled with a drop in construction rates, will result in the RBA making moves to drop cash rates.