Westpac Bank, one of the big four which used to defy Reserve Bank of Australia (RBA) overnight cash rate policies, is recommending more interest rate cuts to boost the Australian economy.

Westpac chief economist Bill Evans said on Wednesday at the release of the Westpac-Melbourne Institute index for economic activity there is already a case for financial conditions to ease but noted that the RBA is still in a wait-and-see mode.

The index indicates a slower pace of growth for the Australian economy in the second half of 2012 and 2013, although improved from previous outlook. The index recorded a 2.4 per cent expansion in June. Although the fastest pace of growth since August 2011, it is below the long-term trend of 2.7 per cent.

"That print for first quarter GDP (gross domestic product) was driven by a surge in real consumer spending, partly resulting from the near deflationary conditions which operated during the quarter," The Herald Sun quoted Mr Evans.

Although the retail spending momentum continued through the second quarter, he attributed it to the carbon tax compensation one-off cash payments by the federal government.

For more robust growth outcomes in 2013, more interest rate cuts were recommended by Mr Evans given the continued strength of the Australian currency, weakening global commodity prices and global economic trends.

He acknowledged it will take time to convince the RBA board to change its wait-and-see approach at least until the end of 2012.

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