Australia’s consumer sentiment edges up despite central bank unchanged rate shock: Survey
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Sentiment advanced by 0.6 per cent to 93.1 points, a Westpac Banking survey showedon July 15.
PHOTO: REUTERS
Australia’s consumer confidence edged higher in July as households’ assessment of their financial position improved even after the Reserve Bank shocked markets by keeping interest rates unchanged.
Sentiment advanced by 0.6 per cent to 93.1 points, a Westpac Banking survey showed on July 15, meaning pessimists persist in outweighing optimists with a dividing line of 100.
“Australia’s consumer sentiment recovery experienced another ‘false start’,” said Westpac’s head of Australian macro forecasting Matthew Hassan. “While the mood improved a touch for the month as a whole, responses over the survey week show a clear disappointment following the RBA’s surprise move.”
Households polled before the rate decision reported an index reading of 95.6 while those surveyed after it reported an index reading of 92, Westpac said.
The RBA has lowered borrowing costs twice in 2025 and wrong-footed investors a week ago when it kept the cash rate at a two-year low of 3.85 per cent, rather than cut it. Governor Michele Bullock said the difference with the market was one of timing rather than direction, suggesting further easing is likely.
Traders are currently pricing two more rate cuts in 2025 with a slight chance of a third.
“Assessments of family finances improved for the survey overall but showed a sharper pull-back following the RBA decision,” Mr Hassan said. “Indeed, even with the RBA’s July surprise, consumers have become slightly more confident that interest rates will continue to move lower over the next year.”
In Australia, where consumption accounts for about half of the economy, households’ attitudes toward purchases are closely monitored by policymakers.
Other key data points:
The family finances vs a year ago sub-index climbed 5 per cent.
The family finances next 12 months sub-index posted a milder 2.6 per cent gain to 101.4, nudging back into net positive.
The time to buy a major item sub-index declined 2.6 per cent to 97.6, partly unwinding June’s 7.5 per cent surge.
The Westpac-Melbourne Institute Unemployment Expectations Index rose 1.1 per cent to 128.7 in July – a higher reading means more consumers expect unemployment to increase over the year ahead.
Westpac noted that while consumers are not fearful of job losses, the reading is broadly consistent with a flat rather than firming labour market.
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