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Investing.com-- Australian consumer sentiment improved slightly in July, though the Reserve Bank’s decision to hold interest rates dampened what could have been a stronger rebound, a Westpac survey showed on Monday.
The Westpac-Melbourne Institute Consumer Sentiment Index rose 0.6% to 93.1, following a 0.5% rise last month. It remained below the 100-mark that separates optimism from pessimism.
Responses collected after the Reserve Bank of Australia’s surprise rate pause showed a clear dip, suggesting the central bank’s inaction checked sentiment, the survey stated.
"The latest check to sentiment is less dramatic but it still leaves the consumer mood stuck at ‘cautiously pessimistic’ levels overall," Westpac economists said in the survey.
Most consumers still expect rate cuts later this year, with mortgage rate expectations hitting a 13-year low. Westpac predicts the RBA will likely cut rates in August if inflation data aligns with its targets.
"Consumer views on the economy had a mixed month in July, with near-term expectations improving slightly but longer-term expectations deteriorating," Westpac survey said.
"Consumers are not overly concerned about the economy but appear unsure about which direction its heading in," it added.