Australian consumer confidence drops as rate-cut forecasts fade

Australian consumer confidence dropped due to ongoing worries about household finances and the economy’s short-term future in March, despite no clear indication of interest rate decreases, Bloomberg reported on Tuesday.

According to a survey by Westpac Banking Corp., sentiment fell by 1.8 per cent to 84.4 points, remaining below the 100-point dividing line since February 2022.

Matthew Hassan, a senior economist at Westpac, noted a significant shift in sentiment following the Reserve Bank of Australia’s (RBA) decision to maintain its benchmark rate at 4.35 per cent.

Sentiment among respondents before the decision was much stronger at 94.9 points but decreased to 79.3 points afterwards.

Although many consumers had hoped for a positive message on inflation and interest rates, the RBA governor did not rule out the possibility of further rate increases.

Most economists now anticipate that the RBA’s next move will be a rate decrease, with the rate-setting board expected to leave borrowing costs unchanged at its upcoming meeting on May 6–7.