The ANZ Roy Morgan Consumer Confidence survey is out and it’s further evidence that the big fall in petrol prices is not gaining traction.
It’s also perhaps a signal that a 25 basis point cut from the RBA might even fail to lift animal spirits at the household level.
The survey showed that confidence fell 0.7% to 112.4 for the week ended February 1. This follows the fall of 0.4% the previous week.
The ANZ said the response to rate cuts “is now the weakest of the last five easing cycles with concerns around the Federal budget, the economic outlook, and job security weighing on sentiment in 2014”. However, when house price rises were added back, response was closer to normal.
That’s a bit confusing but highlights why the governor of the RBA last year said he needed to take the confidence impact of any rate cuts into the equation when he moves.
ANZ chief economist Warren Hogan highlighted this aspect, saying:
With further monetary policy easing likely imminent, the key challenge for the RBA is to communicate the rate cut in a positive light so as to not further damage ‘animal spirits’ in the economy. The RBA can do that by emphasising that lower petrol prices provide both extra cash flow to consumers and businesses, as well as a lower inflation trajectory which gives the scope to lower interest rates.
And here’s the chart showing the week-by-week data.
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