Westpac affirmed its existing expectation that the Reserve Bank of Australia's (RBA) monetary policy board will keep the cash rate unchanged at its June meeting, according to a Friday report.

The preceding three rate hikes have given the central bank space to assess the trends of consumers and housing markets versus high inflation pressures as well as a boom in data centers and related investment.

A lower peak for oil and, thus, petrol and diesel prices lowers the peak for headline inflation to 4.7% from 5%, the bank said, noting that this slightly lower track for underlying inflation is still higher than the RBA's own forecasts. Headline inflation is expected to reach 4.4% on an annual basis in the second quarter.

Meanwhile, trimmed mean inflation was revised marginally lower across the second, third, and fourth quarters, lowering the peak in the year-ended rate to 3.8% from 4%. It is expected to return to the RBA's target band by the end of 2027 at 3% and ease to 2.4% by the end of 2028. It continues to see significant pass-through from higher fuel costs into some other prices.

The bank continues to assume shipping from the reopening of the Strait of Hormuz and Gulf oil supply normalization will rise to around 10% of normal levels by end-June, with full normalization not occurring until mid-2027.