Consumer sentiment takes a dive
By
Adam Smith
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13/07/2011 2:30:00 AM
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Consumer sentiment has fallen to its lowest in more than two years as households show concern over their financial position.
The Westpac-Melbourne Institute of Consumer Sentiment fell 8.3% in June, with households still expecting an RBA rate rise in the coming year in spite of rates remaining on hold for seven consecutive months. Westpac chief economist Bill Evans said households still harboured the fear of future rate moves.
"The confidence of those folks who have a mortgage plummeted by 16.5%. Despite the Reserve Bank keeping rates on hold following the Board meeting in July (until the last governor's statement) the Bank has persisted with its strongly hawkish rhetoric. This is continuing to undermine confidence amongst households who it would appear are incredulous that such a policy is favoured given the current circumstances," Evans said.
Concerns over the property market appear to be easing, however. Evans said recent price declines had led to greater optimism regarding housing affordability. However, he commented that the prospect of prices experiencing further falls may continue to keep prospective buyers out of the market.
Evans commented that in light of the pessimistic consumer outlook, Westpac does not believe the RBA will lift interest rates for the remainder of the year.
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