Westpac CEO Peter King said rate rises will be felt unevenly,with some Australians hit harder than others.Credit:Eamon Gallagher
“Prices are through the roof,interest rates are going up,and depending on where you sit there will be opportunities to grow and prosper,or you may need to adjust to survive. So the impacts will be felt in a very uneven way,” King said in a speech to bank customers in Sydney.
King reiterated that Australia’s economy was starting from a position of strength,with low unemployment,and he said the bank itself had a strong balance sheet. But he said the nation was entering a weaker patch,and Westpac was gearing up to provide help to struggling customers.
“The cost of living and inflation are serious challenges,and they’re hitting some Australians really hard. In response,the RBA is lifting interest rates,and we know that’s a very blunt tool that will be felt unevenly,” he said.
In response to surging inflation,Australia’s official interest rates have jumped from 0.1 per cent to 3.35 per cent since May last year,and the RBA is widely expected to increase rates to 3.6 per cent on Tuesday. Money markets are betting rates will eventually peak at more than 4 per cent.
‘I think that there’s a real argument in the budget for some targeted support for people who are absolutely in hard times.’
Westpac Chief Economist Bill Evans
King made the remarks in a speech that signalled the bank was keen to embark on a “new era” after a period of simplifying its business,announcing its new purpose would be “creating better futures together”.
Speaking at the same event,the bank’s chief economist Bill Evans citedRBA modelling suggesting one in 10 variable mortgage holders will soon have no spare cash left after meeting their repayments and covering their cost of living. He backed using the budget to provide relief to people who were “really doing it tough.”