Westpac boss Gail Kelly believes the Reserve Bank will need to cut interest rates again in coming months as turmoil and uncertainty in Europe continues to undermine local confidence.
The central bank cut its cash rate by 25 basis points on Tuesday, the first official reduction in interest rates in 30 months.
But the bank's board gave few clues about another move in rates.
Ms Kelly does not believe the one cut will be enough to lift the economy out of its soft patch.
"I think we'll be looking at at least a further rate cut, if not in December, in early next year," she told ABC Radio.
Australians were more likely to use the latest cut to save and pay down debt.
"I think people will be cautious simply because of what is going on in Europe," Ms Kelly said.
There was a need to see some stabilisation before people had the confidence to "get out there and spend and invest".
Ms Kelly's comments came as French President Nicolas Sarkozy, German Chancellor Angela Merkel, IMF boss Christine Lagarde and top EU officials held crisis talks over Greece's debt on the eve of the G20 leaders summit in Cannes.
Greek Prime Minister George Papandreou stunned his EU partners and world markets this week by announcing he would be putting a European bail-out plan for his country to a referendum.
Prime Minister Julia Gillard, in Cannes for the summit, said European leaders needed to finalise arrangements to assist Greece and deal with its sovereign debt problems.
"There is now new uncertainty in the European situation," she told reporters in Cannes.
"What Greece has announced has effectively put the European crisis on fast forward."
Australia stood ready to increase its funding for the International Monetary Fund (IMF) to safeguard the global economy, Ms Gillard said.
Opposition treasury spokesman Joe Hockey described the prime minister's announcement as "astonishing".
"The suggestion that we should be putting money into the IMF to bail out the eurozone when not even the British are prepared to do so is extraordinary," he told reporters in Canberra on Thursday.
He later told ABC Radio the coalition had "grave concerns" Australian taxpayers would be seen to be bailing out the largest economy in the world.
The government already was in debt and would need to increase its borrowings to give more funds to the IMF.
"Therefore we will be borrowing money to lend to the Europeans who in turn will be lending to Greece," Mr Hockey said.
