The Westpac-Melbourne Institute index of consumer sentiment was unchanged in March, following a dive of 6.9 percent the month before. The index reading of 78.5 meant pessimists greatly outnumber optimists.
“Index reads below 80 are rare, back-to-back reads even rarer,” noted Westpac chief economist Bill Evans. “Both the COVID shock and the Global Financial Crisis saw only one month of sentiment at these levels.”
The result was echoed by a weekly survey from ANZ which showed a 2.9-percent drop to the lowest since April 2020, when the pandemic closed much of the country.
Both found mortgage holders and tenants were particularly gloomy after the Reserve Bank of Australia (RBA) lifted its cash rate a quarter point to 3.6 percent on March 7.
Markets had thought another two rate hikes were possible, until turmoil in the U.S. banking sector radically altered thinking on policy tightening world wide.
Now, swaps and futures imply only a minor chance the RBA will lift rates at its April meeting and could, in fact, be done tightening altogether.
The impact of higher borrowing costs on household budgets was already clear with the Westpac measure of whether it was a good time to buy a major household item sliding 4 percent to the lowest in over a decade.
The index of the economic outlook for the next 12 months dropped 2.3 percent, though the outlook for the next five years did bounce 5.6 percent.
The survey’s measure of family finances compared with a year ago edged up 2.2 percent after diving in February, while the outlook for finances over the next 12 months fell 1.8 percent
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