Consumer confidence dipped last week, with economists attributing the shift in sentiment to the Reserve Bank of Australia’s (RBA) unexpected decision to leave the cash rate unchanged at 3.85%.
According to the latest ANZ-Roy Morgan survey released on Tuesday, consumer confidence fell 2.1 points, reversing a recent upward trend. ANZ economist Sophia Angala noted that the surprise rate pause disrupted improving sentiment. “While the previous upward trend in consumer confidence is stalled for now, we expect a resumption of the improvement this year, as robust yearly growth in disposable incomes and further rate cuts flow through to households,” she said.
Westpac’s broader consumer sentiment index edged 0.6% higher to 93.1 in July, though the headline increase masked a sharp divergence around the RBA’s decision. Westpac’s Head of Australian Macro-Forecasting, Matthew Hassan, observed that those surveyed before the decision recorded an index reading of 95.6, while those surveyed afterwards reported a weaker 92.
“The reaction checked what would probably have been a solid rise,” Hassan said.
Despite the pause, most consumers still anticipate rate cuts ahead. ANZ forecasts that the RBA will reduce the cash rate by a total of 50 basis points across the August and November meetings, bringing it to 3.35%.