WestpacWeekly20260921

Week beginning 21 September 2026

AUSTRALIA & NEW ZEALAND WEEKLY Analysis and forecasts for this week’s key releases.

In this week’s edition: Economic Insight: A changing investment narrative requires a careful reader; Rate call: tactical timing change to September.

The Week That Was: Seeking to instil trust. Focus on New Zealand: Economy bags modest growth in Q2; patchy start to Q3.

For the week ahead: Australia: Labour force survey, RBA speak (Governor, Assistant Governor (Economic), MPB Member). New Zealand: Westpac-MM employment confidence. Euro Area: Consumer confidence, IFO business survey, money supply. United Kingdom: House prices, public sector borrowing. United States: Durable goods orders, regional manufacturing surveys, home sales, Fedspeak. Global: S&P Global PMIs.

Information contained in this report current as at 18 September 2026.

Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.

A changing investment narrative requires a careful reader Luci Ellis Chief Economist, Westpac Group

• Strong business investment, autonomous from Fortunately, that did not happen. Developments in the private government or central bank policy, has filled the gap left sector, autonomous from domestic policy, have recently by slower growth in public demand, and changed the become a key driver and filled the gap as public sector demand narrative around the growth cycle. This has implications growth slowed. In many respects, the data centre boom and for how we should think about financial conditions, and associated renewables spend is rewriting the narrative, and specifically business credit growth. our recent forecast revisions reflect this.

• Typically, business investment is only loosely correlated This shift has several implications for how we should think with interest rates, and business credit growth is in turn about financial conditions and specifically how business credit only loosely correlated with new investment. Business growth fits into any assessment of financial conditions. balance sheets strengthened in the wake of the pandemic, so there might be scope for further increases in leverage. First, business investment is not that correlated with short- The pre-pandemic period of low growth, inflation and term interest rates. This was true in the post-GFC period interest rates is in any case not the relevant period of of slow growth, when hurdle rates stayed high even though comparison for where we are now. interest rates were unusually low. It will also be true in the upswing. The hyperscalers and other funders that are driving • If something is essentially impervious to interest rates, the data centre boom are essentially indifferent to cost. They then it cannot be an indicator of financial conditions more do not seem to care that they are funding themselves at much broadly. There is a difference between a claim that policy wider spreads than similarly rated non-tech firms. Nor do is restrictive but needs to be even tighter because of a they seem to care about cost to build. They just want to get it positive shock, and a claim that policy is not tight at all. done as fast as possible. But if their activities are impervious These are important considerations for how we should to interest rates and spreads, they cannot guide views on how interpret developments in business credit. the economy is responding to interest rates.

Historically, much of the commentary on the growth cycle “If something is essentially impervious to in Australia has been policy-driven. The RBA sets the cash rate, which affects housing and mortgage markets, and so interest rates, then it cannot be an indicator consumer spending. Business investment was seen as largely downstream of a consumer-driven domestic demand cycle, on of financial conditions more broadly." the logic that businesses will not…