Westpac’s chief executive Gail Kelly has called for a rate cut before the end of the year to boost consumer and business sentiment.

The Reserve Bank of Australia (RBA) meets on Tuesday, and it is a “line ball call” if they will deliver a fourth rate cut for 2012, Mrs Kelly said on Monday.

But she expects a cut before Christmas if rates are left on hold on Melbourne Cup day.

“If not tomorrow, then probably December,” she said.

“I think we are definitely in an environment where declining interest rates are the likely outcome, and I think it would certainly be very beneficial for consumer confidence and consumer sentiment if we continue to see rates come down.”

But Mrs Kelly refused to say whether Westpac would pass on any rate cuts delivered by the RBA.

“I really don’t want to talk about what we might do with pricing decisions,” Mrs Kelly said.

Funding costs remain high, she added, which increases the likelihood of the bank cutting its lending rates by less than any RBA move, despite a five per cent rise in its full year cash profit to $6.6 billion.

“The biggest factor in the funding costs continuing to rise is the very high rates we are paying for retail deposits because they are so precious,” she said.

“We are not yet at the position where average funding costs are coming down.

“We’re looking forward to that time and it will come, but I have to say that the global financial crisis, or the issues and travails in Europe … certainly put that timetable back.”