Despite pressure being placed on Australian banks to continue to pass on any rate cut in full, speculation is mounting that Westpac could be the first to adjust its interest rates out of cycle with the RBA.
According to an article in The Australian, the bank's strong presence in the domestic residential mortgage market has triggered talk that the major will be the first of the majors to break with the RBA.
Westpac made big moves into mortgages during the global financial crisis, which is now likely to result in the bank "repricing" its assets to offset higher wholesale funding.
An analyst quoted by The Australian said that of all the majors Westpac appears to be in the most likely position to move its interest rates out of cycle.
"Westpac to us is the natural price leader despite having a relatively cheap flagship standard variable rate, with funding cost pressures that will increase the need for an industry repricing, in our view," Credit Suisse analyst Jarrod Martin told the paper.