The Westpac Banking Corp (ASX: WBC) share price set a series of fresh 52-week highs in March.

However, shares in the S&P/ASX 200 Index (ASX: XJO) bank stock began to retrace mid-month, which saw the stock finish March slightly in the red.

Westpac closed out February trading for $26.35 a share. When the closing bell sounded on 28 March, shares were changing hands for $26.10 apiece, down 1.0%.

Here's what happened over the month just past.

Westpac joined the other big four ASX 200 banks stocks to set new 52-week and even multi-year highs in March.

On 8 March, the Westpac share price closed at $27.70.

The rally in bank stocks was spurred by increasing optimism over pending interest rate cuts from the Reserve Bank of Australia and the US Federal Reserve.

On the domestic front, Westpac could enjoy an earnings boost if the bank opts not to pass on the RBA's full cash rate cut to its customers. Of course, we still need to wait and see just when the central bank is confident enough about the inflation outlook to begin easing its policies.

As the month progressed, the Westpac share price came under some selling pressure.

The first headwind, which hit all the ASX 200 bank stocks, came on 14 March.

That's when investors learned that Macquarie had downgraded Westpac along with National Australia Bank Ltd (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ) to an 'underperform' rating.

The broker already had an 'underperform' rating on Commonwealth Bank of Australia (ASX: CBA) shares.

Commenting on the rationale for the downgrade, Macquarie analyst Victor German said, "Banks are trading at peak multiples without a clear fundamental reason."

Macquarie has a $26 price target on Westpac shares, which is now 0.5% above the current price of $25.87 a share.

Trading on a price-to-earnings (P/E) ratio of 13.4 times and a fully franked trailing dividend yield of 5.4% I think the 24% gain in the Westpac share price over the past six months is justifiable.

While I don't expect shares to retrace significantly from current levels, it's hard to see the ASX 200 bank stock delivering similar outsized gains over the next half-year.

Much of the performance is going to depend on the outlook for the Aussie and global economies.

If inflation continues to ease amid a so-called 'soft landing' for the economy, and central banks finally start to cut interest rates, the Westpac share price could well surprise to the upside.