Australian consumer confidence slumps in December

December 14th, 2011 - 1:52 pm ICT by IANS  

Sydney, Dec 14 (IANS) Australia’s consumer confidence slumped in December, despite recent cash rate cuts by the central bank, a survey by Westpac Banking Corp and the Melbourne Institute of Applied Economic and Social Research showed Wednesday.

The Westpac/Melbourne Institute Index of Consumer Sentiment fell by 8.3 percent in December from 103.4 points in November to 94.7 points, its lowest level since August, reported Xinhua.

Westpac chief economist Bill Evans said the result was surprising.

“On face value, it should be a surprise that the index has not risen following a second rate cut from the Reserve Bank (which was eventually passed on in full by the major banks to mortgage borrowers),” he said in a statement Wednesday.

“However, the history of previous easing cycles shows that rate cuts do not guarantee an improvement in sentiment.”

Evans said respondents’ concerns over the reasons behind the rate cut have probably overwhelmed the perceived benefits of the cut itself.

Confidence of respondents with a mortgage fell by 9.5 percent, while sentiment dropped 8.3 percent for people who own their homes without a mortgage, he said.

Evans said respondents’ sentiment seemed to reflect the general concerns about global economic conditions. He also said Westpac expected the Reserve Bank of Australia to cut rates again at its next board meeting Feb 7.

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