The Westpac Banking Corp (ASX: WBC) share price is trading in the red on Wednesday afternoon. At the time of writing, the shares are 1.92% lower at $37.76 a piece.
During 2026 so far, the shares have fallen 2.02%, but they're still trading 18.81% above levels seen this time last year.
Why is the Westpac share price in the spotlight this week?
Investor interest in Westpac has jumped this week after some noticeable shifts in the company's share price.
The banking giant's shares slid nearly 4% last week as an ongoing focus on inflation weighed on investor sentiment. Changing views on the RBA's next move have also driven some volatility across the banking sector, putting Westpac in the spotlight as investors reassess bank margins, earnings outlooks, and valuations heading into 2026.
Late last year, Reserve Bank Governor Michelle Bullock said that she didn't see a rate cut "on the horizon for the foreseeable future" and signalled that the board might consider an extended hold period or even a rate hike in 2026.
The cash rate currently stands at 3.6%, a level it has maintained since the RBA's last rate cut in August 2025.
Westpac's economists recently revised their outlook for the RBA cash rate to an extended hold for the entirety of 2026.
The bank's Chief Economist stated that inflation is expected to moderate in 2026, but not soon enough to prompt the RBA to reconsider its current hawkish stance on the risks. "If our broader set of forecasts are borne out, rate cuts are still feasible in February and May 2027," the Chief Economist said at the time.
Westpac is also in the spotlight after it announced a new disaster relief package for customers impacted by Victorian bushfires. Immediate assistance includes deferred home loan repayments for up to three months, home and contents insurance support, deferred credit card payments for up to 90 days, and cash flow support for business customers.
What can investors expect from Westpac shares this year?
Much like the rest of the big 4 banks, analysts' sentiment is bearish about the outlook for the Westpac share price in 2026.
TradingView data shows that analysts are relatively split – 7 have a hold rating on the stock, and another 9 have a sell or strong sell rating.
The average 12-month target price is $33.41, which implies an 11.63% downside from the share price at the time of writing. However, some brokers think the share price could drop as low as $23.03 a piece. That would translate to a 39.09% downside for 2026.
