Australia debt-laden households responded more with concern than enthusiasm to the Reserve Bank’s interest-rate cut, according to surveys conducted since last week’s move.
Westpac Banking Corp.’s consumer sentiment index fell 0.6% in June, while Australia & New Zealand Banking Group Ltd.’s weekly report showed a 2% drop, the lenders said Wednesday. Westpac noted that confidence was showing signs of strength in the lead up to the policy easing, but that fell away in the following days -- suggesting respondents were impacted by last week’s GDP data showing the weakest annual expansion in 10 years.
The biggest decline in Westpac’s sub-indexes was the one tracking economic expectations for the next year, which slid 4.7%.
RBA Governor Philip Lowe ended an almost three-year pause to cut the cash rate to a new record low of 1.25% last Tuesday as he tries to encourage firms to hire and invest and revive a slowing economy and tepid inflation. His decision was validated in a separate survey of businesses released yesterday that showed a continued deterioration in conditions.
Source : Bloomberg