Australian consumer confidence jumped in November as the central bank’s first interest-rate cut in 31 months lowered payments for mortgage holders, a private survey showed.
The sentiment index climbed 6.3 percent to 103.4, the third straight monthly gain and the highest level since May, according to a Westpac Banking Corp. (WBC) and Melbourne Institute survey of 1,200 consumers taken Oct. 31-Nov. 6 and released today in Sydney.
Reserve Bank Governor Glenn Stevens lowered the developed world’s highest rates Nov. 1 to 4.5 percent from 4.75 percent as commodity prices weakened and Europe’s sovereign debt crisis dimmed prospects for global growth. Traders bet there is an 86 percent chance he will reduce rates by a quarter percentage point again next month, interbank cash-rate futures show.
“We would expect the next move to be in February next year when the bank has had time to assess the impact of the first move; more information is available about the global economy; and further evidence is available on inflation,” Bill Evans, Westpac’s chief economist, said in an e-mailed statement. “The real test for the current cycle is whether this recent recovery in confidence can be sustained.”
The nation’s four biggest banks -- Commonwealth Bank of Australia (CBA), Australia & New Zealand Banking Group Ltd. (ANZ), National Australia Bank Ltd. (NAB) and Westpac -- reduced home-loan rates for customers after the RBA’s move.
The Reserve Bank, in a quarterly statement released Nov. 4, lowered its forecasts for economic growth and inflation for the next two years as financial turmoil abroad makes businesses more reluctant to hire and consumers wary about spending.
“Our interpretation of the bank’s recent Statement on Monetary Policy is that it is troubled by developments in Europe and, due to a more downbeat assessment of the domestic economy, sees clear room to cut further,” said Evans, who in July was the first economist to predict Australia’s central bank would reduce rates this year.
Australian employment has weakened this year from record growth in 2010 and the unemployment rate reached a 10-month high in August before falling to 5.2 percent in September. A government report tomorrow will show it rose to 5.3 percent in October, according to the median estimate of 24 economists.
The Australian dollar, the world’s fifth-most traded currency, has dropped 6 percent from its record-high $1.1081 reached July 27 amid speculation Greece will default and spur a repeat of the 2008 credit freeze that followed the collapse of Lehman Brothers Holdings Inc.
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