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Bill Evans, analyst at Westpac, notes that the Australia’s Westpac-Melbourne Institute Index of Consumer Sentiment declined by 1.7% to 98.2 in September from 100 in August.

Key Quotes

“The consumer mood has lapsed back into slight negative territory again with continued pressure on family finances and concerns about the near term outlook weighing on sentiment.”

“The September survey included additional questions on the tax offset payments the Federal government began making with tax refunds from July 1. Just over 16% of consumers reported receiving a payment. We estimate that around 30% of households are likely to receive a meaningful rebate so this survey indicates that about half of eligible consumers have already received a payment.”

“The Reserve Bank Board next meets on October 1. Westpac expects the Board will decide to cut the cash rate by a further 0.25% from 1% to 0.75%.”

“Month to month timing of RBA moves is imprecise but with the case for lower rates quite clear and both US Federal Reserve and European Central Bank likely to be easing policy in the next week or so the next meeting in October seems a sensible time for the Reserve Bank to deliver the next rate cut.”

“Westpac expects a second cut in February 2020, which we believe will follow further cuts from the Federal Reserve by year’s end.”