Consumer confidence in Australia remained low in February, failing to benefit from the slowdown in inflation and expectations of upcoming interest rate cuts. This phenomenon provides the possibility for the Reserve Bank of Australia to relax monetary policy as early as next week.

According to a survey conducted by Westpac Melbourne Institute on Tuesday (February 11th), the consumer confidence index in February only increased by 0.1% compared to January, while it decreased by 0.7% in January. Although the index has increased by 7.2% compared to the same period last year, reaching 92.2, pessimists still outnumber optimists. Matthew Hassan, Head of Macro Forecasting at Western Pacific Bank in Australia, pointed out that consumer confidence improved in the second half of 2024, but the recovery over the past three months has stalled, mainly due to ongoing household financial pressures, unstable global environment, and increased expectations of domestic interest rate cuts.

According to the survey, 36% of respondents expect mortgage interest rates to decrease in the next year, 21% believe there will be no change, and 28% expect them to increase. The financial market's confidence in policy easing has greatly increased, suggesting a 95% chance that the Reserve Bank of Australia will lower its 4.35% benchmark interest rate at its meeting on February 18th.

The segmentation results show that the evaluation of household financial status has decreased by 3.4% to 75.1 compared to a year ago, continuing the 7.8% decline in January. However, the household financial situation index for the next 12 months is 105.0, an increase of 0.6%, indicating that optimists are in the majority and the outlook is relatively bright. The economic outlook index for the next 12 months has increased by 1.9%, and the economic outlook index for the next five years has increased by 0.9%. The index measuring whether it is a good time to purchase large household items has increased by 0.1%, but it is still at a historical low of 90.9.

Overall, Australian consumer confidence remains low, household financial pressure persists, global environmental instability, and increased expectations of domestic interest rate cuts are the main reasons. This phenomenon provides the possibility for the Reserve Bank of Australia to relax monetary policy as soon as next week, although consumer confidence has improved, it is still necessary to closely monitor future economic trends.