Consumers remain uneasy over high interest rates, as the Reserve Bank has been slow to lower rates. The Westpac survey found that consumers are more concerned about unemployment and less likely to purchase a major household item.
The NAB Business Confidence Index also headed lower, falling in August to 4 points, down from 8 in July. This marked a three-month low. Still, business conditions showed improvement and forward orders moved higher.
Will the RBA lower rates?
The Reserve Bank of Australia is coming off a quarter-point rate cut and meets next on September 30. The money markets don’t expect a cut in September, as GDP rose in Q2 to 1.8% from 1.4% and core inflation jumped to 2.7% in July, up from 2.1%. A stronger economy and higher inflation will make it more difficult for the RBA to lower rates.
We could see a rate cut in November and further easing early in the new year. Much will depend on the direction of inflation, the strength of the labor market, and the health of the Chinese economy.
In the US, the Federal Reserve is poised to deliver a rate hike next week for the first time since December 2024. The weak nonfarm payrolls report has raised the likelihood of a half-point cut to 12%, with a quarter-point cut priced in at 88%, according to CME’s FedWatch.
