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Investing.com-- Australian consumer sentiment was largely unchanged in February after dropping in the previous two months, a private survey showed on Tuesday, reflecting a cautious economic outlook despite interest rate cut expectations.
The Westpac-Melbourne Institute Consumer Sentiment Index rose 0.1% to 92.2 in February. The index had fallen 0.7% in January, and 2% in December.
"The consumer mood improved materially over the second half of 2024 but the recovery has stalled in the last three months as continued pressures on family finances and a more unsettled global backdrop have weighed against firming expectations of rate cuts domestically," Westpac economists said in a survey.
It seems that many people faced more financial strain than usual after the Christmas holiday season and are still struggling with the high cost of living, according to the survey.
However, consumers have become much more confident about the prospect of interest rate cuts, the survey stated, adding that half of the consumers with a mortgage now expect rates to move lower compared with just a third two months ago.
The Reserve Bank of Australia is scheduled to meet on February 17–18 to decide on its interest rates.
Recent figures on core inflation, wage growth, and consumer spending are likely to reinforce its confidence that inflation is approaching the target more quickly than initially anticipated, according to the Westpac survey.
"Consistent with its inflation mandate, we expect the Board to begin reducing the restrictiveness of monetary policy with a 25bp cut at its upcoming meeting," Westpac economists said.