- Westpac
Australian consumer confidence improved markedly in May after the Reserve Bank of Australia trimmed interest rates for the first time in a year. The Westpac-Melbourne Institute Consumer Sentiment Index jumped 8.5% in May to a January-2014 high of 103.2, after sliding to a seven-month low of 95.1 in April. In percentage terms, the increase was also the largest since June 2010. An index level above 100 signals that the majority of consumers are positive about the outlook for the economy and their personal finances, whereas a reading below 100 indicates pessimism. Confidence in the one-year economic outlook, along with readings on family finances and whether now was a good time to buy a major household item, also recorded solid rises. Westpac said the past four rate cuts have spurred, on average, a 6.6 per rise in the index, with gains ranging from 3.5% to 8.5%.
The Reserve Bank of Australia surprised economists by slashing interest rates to a new historic low in a bid to reignite inflationary pressures. The central bank cut the official cash rate by 25 basis points to 1.75%, after keeping rates on hold for a year. The decision came after the Australian Bureau of Statistics released quarterly CPI data, showing headline inflation plunged from 1.7% in the final quarter of 2015 to 1.3% last quarter.
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