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Westpac consumer sentiment rebounds in Australia after RBA rate hold
The Westpac–Melbourne Institute index rose 6.0% in August, while unemployment expectations worsened and house price expectations fell despite the RBA keeping rates unchanged on August 11.
Australian consumer sentiment improved in August, according to the Westpac–Melbourne Institute Consumer Sentiment Index, which climbed from 83.9 to 88.9, a 6.0% monthly gain. Action Forex said the pickup was concentrated among mortgage holders and showed up largely after the Reserve Bank of Australia kept rates unchanged on August 11.
Current financial assessments drove much of the rebound. The index component for family finances versus a year ago rose from 71.1 to 80.0, while the measure for time to buy a dwelling increased from 85.4 to 95.7.
Still, the headline index remained below the neutral level of 100 and was 9.7% weaker than a year earlier. Forward-looking indicators were less supportive, with family finances over the next 12 months edging up from 96.5 to 98.2, economic condition expectations rising from 78.3 to 82.8, unemployment expectations deteriorating from 129.9 to 135.7, and house price expectations falling from 118.0 to 110.8.
Consumers continued to expect tighter borrowing conditions, with 59% saying mortgage rates would rise further. Action Forex noted Westpac’s view that the RBA is unlikely to have sufficient new evidence by its September 28–29 meeting to judge that upside inflation risks have materialised, keeping September more inclined to another hold even as the board retains the option to hike again.