Australian consumer confidence slumped by the most in nine months as concern about the economic outlook and unemployment overshadowed the central bank’s interest-rate cuts, a private survey showed.
The sentiment index for December dropped 4.1 percent to 100, a Westpac Banking Corp. (WBC) and Melbourne Institute survey taken Dec. 3-9 of 1,200 adults showed today in Sydney. The decline ended the index’s three-month advance.
Reserve Bank Governor Glenn Stevens and his board lowered the benchmark rate to 3 percent on Dec. 4, matching the level reached from April-October 2009 that was the lowest since 1960, as leading indicators signaled a weaker labor market and the elevated currency hurts industries including manufacturing. Today’s report showed a gauge on whether now is a good time to buy a major household item declined by 4.8 percent.
“Evidence to date is that low rates are not generating much traction with households,” Bill Evans, Westpac’s chief economist, said in a statement. “Despite another rate cut and improving sentiment towards housing, consumers remain cautious and particularly concerned around the outlook for the economy and for employment.”
Traders are pricing in a 53 percent chance policy makers will lower borrowing costs by a quarter-percentage point to a record-low 2.75 percent at their meeting in February, swaps data compiled by Bloomberg show.
“The Reserve Bank has two more months to assess the impact of its interest rate moves before its next meeting,” Evans said. “There is likely to be a decision to further ease rates in February or March.”
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