WEEKEND ECONOMIST: Consumed by Europe

Consumer sentiment remains disappointingly weak despite recent rate cuts and the RBA will be keeping a close eye on global developments to determine its next move in the easing cycle.

The Westpac Melbourne Institute index of consumer sentiment increased by 0.3 per cent in June. That was another disappointing result. It follows a second consecutive cut in the official cash rate by the Reserve Bank. Sentiment has risen only 1.1 per cent from its April level and remains 1.7 per cent below the level recorded in October last year despite a 125 basis point reduction in the cash rate that has brought the average standard variable mortgage rate down by nearly 1 per cent.

Clearly other factors are dominating rates in the minds of consumers – those factors are concerns about the domestic economy and international conditions.

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