Rate cut gives consumer boost

11 May 2016

It seems as if the RBA magic wand has done the trick. The latest Westpac Melbourne Institute consumer sentiment survey shows a big kick upwards to 103.2 from April’s reading of 95.1. The higher reading indicates more consumers are optimistic than the number of consumers who are pessimistic.

All of the five components of the index rose in May. Westpac’s chief economist Bill Evans says his bank’s analysis suggest the recent rate cut was the “dominant driver” and such a rise has been common in the past after other rate reductions.  However, even after the turnaround in consumer optimism, Westpac still expects the RBA to reduce rates by another 25bps to 1.50% in August.

WBCMI May Cons Sentiment Chart