Westpac’s Chief Executive Officer, Anthony Miller, has stated that the recent decline in inflation strengthens the argument for reducing interest rates. Following an announcement on March 6, 2024, that underlying inflation has fallen to a three-and-a-half-year low of 2.7 percent, Miller expressed his belief that this trend should encourage the Reserve Bank of Australia to consider a rate cut at their next meeting.
Miller noted that the likelihood of a rate cut has increased, with market expectations suggesting a 90 percent chance of a decrease in August. Although he acknowledged the uncertainty surrounding the Reserve Bank’s decisions—highlighting their unexpected choice to maintain rates earlier this month—he emphasized the significance of the trimmed mean inflation rate. This measure excludes items with extreme price fluctuations and has shown a positive movement recently.
“The trimmed mean is the one that I think we should all fixate on. The fact that it wasn’t up probably is another data point that reinforces that it is open to the Reserve Bank to cut rates,” Miller remarked during a discussion at the Trans-Tasman Business Circle event in Sydney.
While advocating for potential rate cuts, Miller also cautioned that the progress in combating inflation is not overwhelming. He recalled that just four weeks ago, market sentiment was similarly confident in a rate cut, which did not materialize. “It feels like there’s even more evidence now that they should [cut rates], but I can’t help but think that only four weeks ago, everyone was absolutely clear that there was a rate cut coming, and it didn’t,” he stated.
Economic Outlook and Growth Strategies
Miller’s perspective on the economy remains relatively optimistic. He pointed out that the number of home loan customers who are more than 90 days behind on repayments continues to decline. In business banking, he noted a decrease in stress levels, along with “very encouraging” demand for credit.
As the leader of Australia’s oldest bank, Miller is navigating challenges presented by increased competition in the mortgage market, notably from companies like Macquarie Group. In response to these pressures, he outlined part of Westpac’s growth strategy, which includes enhancing services for its existing customer base of 10 million—with only a third currently viewing Westpac as their primary financial institution.
To achieve this goal, Miller announced plans to employ more customer-facing bankers and to enhance the bank’s mobile app functionality. These initiatives aim to solidify Westpac’s position in a competitive financial landscape.
Additionally, Miller revealed some of Westpac’s proposals ahead of the federal government’s economic roundtable next month. These proposals include strategies to encourage one million people to relocate to regional centres, increasing income tax thresholds in line with inflation, and implementing regulatory changes to facilitate the construction of more affordable housing.
Media Scrutiny and Leadership Responsibilities
During the event, Miller also addressed the recent media scrutiny surrounding National Australia Bank CEO Andrew Irvine. Reports from The Australian Financial Review have indicated that major investors raised concerns about Irvine’s management style and behavior at public functions. Miller described the situation as “very unfair” to Irvine, acknowledging the high level of visibility and accountability expected of executives in the banking sector.
“I always expected that there would be an element of limelight because you are representing this company,” he said. “You need to conduct yourself in a way that reflects the importance of your role.”
Westpac, as one of the major players in Australia’s financial sector, continues to navigate the complexities of a changing economic landscape while ensuring that its leadership remains committed to the long-term interests of its customers and the broader community.
