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Investing.com-- Australian consumer sentiment surged to its highest level in more than three years in August, lifted by a string of Reserve Bank of Australia (RBA) rate cuts and easing cost-of-living pressures, a Westpac survey showed on Tuesday.
The Westpac-Melbourne Institute Consumer Sentiment Index jumped 5.7% to 98.5, following a meager 0.6% rise to 93.1 last month. The reading was highest since early 2022 but still remained below the 100-mark that separates optimism from pessimism.
"This long run of consumer pessimism may finally be coming to an end. August’s 5.7% rise means the Index is now just 1.6% away from being back in net positive territory," the survey stated.
The poll showed households were less anxious about their finances and more optimistic about the economy over the next year.
Westpac economists said the rebound reflected the RBA’s more accommodative stance, with three rate reductions this year helping to ease mortgage stress and reinforce expectations of further relief.
Confidence was broad-based, with gains not only among mortgage holders but also renters, who have seen some moderation in cost pressures.
"While the latest interest rate cut was a clear positive, some of the latest lift may also reflect easing tariff-related uncertainty," Westpac added.
The bank now expects RBA to "take things meeting by meeting and respond to the flow of data as it comes in."
It expects the central bank to keep cash rates steady at its September meeting ahead of a further 25bp rate cut in November.