Australian Consumer Confidence Little Changed After Rate CutsMichael Heath
Australian consumer confidence was little changed as households worried about their finances shrugged off central bank interest rate reductions and a lower unemployment rate, a private survey showed.
The sentiment index for January rose 0.6 percent to 100.6, a Westpac Banking Corp. and Melbourne Institute survey taken Jan. 7-13 of 1,200 adults showed today in Sydney. Readings above 100 indicate optimists outnumbered pessimists.
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. Bill Evans, Westpac’s chief economist, said today’s report showed little improvement in sentiment from a stronger local stock market and a better outlook for China, Australia’s largest trading partner.
“Clearly these positive news events have failed to move respondents,” Evans said. “Respondents have become more guarded around their own finances.”
The local dollar is up 1.6 percent this year, the best performer among the Group of 10 currencies tracked by Bloomberg.
Traders are pricing in a 36 percent chance policy makers will lower the overnight cash rate target by a quarter-percentage point to a record-low 2.75 percent at their Feb. 5 meeting, swaps data compiled by Bloomberg show.
“The case for a further rate cut as early as the February meeting is still reasonable,” Evans said. “However, a prudent Reserve Bank which has seen a resurgence in the terms of trade, is likely to defer in February to await further evidence around the impact of the rate cuts. Accordingly we have opted for the next cut in the March end of our forecast.”
Australia’s jobless rate fell in November to 5.2 percent from 5.4 percent a month earlier. The Bureau of Statistics is scheduled to release a report tomorrow on employment in December.