Australian Consumer Confidence Improves as Reserve Bank Considers Rate Hike

Australian consumer confidence showed signs of improvement last week, despite concerns over possible interest rate hikes by the Reserve Bank of Australia (RBA) to address inflation pressures. According to a survey conducted by the ANZ Bank and pollster Roy Morgan, consumer confidence rose by 2.8 points over the week.

While the overall increase is positive, it is important to note that confidence measures over the past four weeks have been lower. Additionally, inflation expectations have risen slightly from 5.3% to 5.4%.

The RBA board meeting, scheduled at 0330 GMT, is anticipated to announce the first increase in the official cash rate since June. The central bank is concerned that inflation may not decrease as expected in the coming year. If the rate is increased, it would rise from the current 4.10% to 4.35%, putting the RBA in opposition to other major central banks that have signaled a pause in their tightening policies.

ANZ senior economist Adelaide Timbrell stated that confidence levels remain weak due to high inflation and increased interest payments, which impact households' ability to save and spend. Confidence is lowest among those paying off mortgages; however, this week saw a slight increase in confidence among renters and outright homeowners, while those paying off their homes experienced a decrease in confidence.

The survey revealed that confidence around current financial conditions rose by 6.5 points last week after a cumulative decline of 11 points in the previous three weeks. Future financial conditions saw a slight increase of 0.2 points.

Furthermore, sentiment around current economic conditions increased by 1.9 points, while future economic conditions decreased by 0.8 points. The index measuring the time to buy a major household item jumped by 6 points, reaching its highest level since early February.

The weekly ANZ-Roy Morgan Australian Consumer Confidence Rating is based on 1,485 interviews conducted online and over the telephone throughout the week until Sunday.

Australian Consumer Confidence Improves Despite Expectations of Interest Rate Hike

Australian consumer confidence showed signs of improvement last week, defying predictions of an imminent interest rate hike by the Reserve Bank of Australia (RBA) aimed at curbing inflationary pressures. According to a survey conducted by the ANZ Bank and pollster Roy Morgan, consumer confidence rose by 2.8 points over the week.

However, this positive uptick was accompanied by some weaknesses. Confidence levels over the past four weeks remained relatively low, while expectations for inflation rose from 5.3% to 5.4%. The RBA's upcoming board meeting, scheduled for 0330 GMT, is anticipated to result in the first increase in the official cash rate since June. The central bank is concerned that the anticipated decline in inflation over the next year might not be as rapid as expected. If the rate hike is implemented, it will push the official cash rate up from its current level of 4.10% to 4.35%, placing the RBA at odds with other major central banks that have recently indicated a pause in tightening monetary policy.

ANZ's senior economist, Adelaide Timbrell, noted that consumer confidence remains at very weak levels due to high inflation and increased interest payments. These factors have eroded households' ability to save and spend. Among those paying off their homes, confidence is particularly low, with a slight widening of the gap this week as renters and outright owners experienced a boost in confidence while those paying off mortgages reported a decline.

The survey also revealed that confidence in current financial conditions saw a significant increase of 6.5 points last week, following a cumulative decline of 11 points over the previous three weeks. Similarly, sentiment around current economic conditions rose by 1.9 points, but expectations for future economic conditions fell slightly by 0.8 points. The time-to-buy index for major household items experienced a significant surge of 6 points, reaching its highest level since early February.

The ANZ-Roy Morgan Australian Consumer Confidence Rating, which provides a weekly assessment, is based on 1,485 interviews conducted both online and over the telephone throughout the week until Sunday.