-Matthew Hassan, senior economist at Westpac
Surge in Australia's consumer confidence last month appeared to be short-lived, denting hopes for a consumption-driven recovery despite the central bank cutting interest rates in February and signalling its intention to lower rates at least one more time in coming months. The Westpac-Melbourne Institute Consumer Sentiment Index declined 1.2% to 99.5 points in March from the previous months, breaking below the 100-point threshold, meaning pessimists outnumber optimists. The Reserve Bank of Australia reduced its benchmark interest rate in February to a all-time low 2.25% and left open the possibility of at least one more cut in coming months. Deteriorating business confidence, sluggish job markets, crumbling business investment as well as a mixed global economic outlook have some analysts expecting the RBA will cut its official cash rate below 2.0% time.
A separate report showed lending for housing investment declined more than expected in January. The number of Australian home-loan approvals dropped a seasonally adjusted 3.5% in the first month of the year from December, the Bureau of Statistics reported, reversing a 2.7% increase a month earlier. Economists, however, had expected a 2.0% decline. The value of loan investment housing fell 0.1% in the reported period.
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