Login
ISCOVER
The ANZ-Roy Morgan Consumer Confidence rating has hit its highest point since May 2022 amid speculation of a February rate cut.
The latest ANZ-Roy Morgan Consumer Confidence release has revealed growing signs of positivity among Australian consumers, with the index ticking up to its highest point since May 2022.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
Consumer confidence rose 2.5 points to 88.5 in the week to 2 February 2025, according to the release, the highest reading since May 2022.
Data showed consumer confidence is now 4.7 points higher than the same week a year ago, 29 January to 4 February 2024 (83.8) and 1.5 points above the weekly average for 2025 (87.0).
The increase was largely driven by sentiment improvements in Victoria, Queensland, Western Australia, and South Australia, while remaining unchanged in NSW.
Meanwhile, ‘weekly inflation expectations’ declined 0.4 points to 4.6 per cent, bringing the four-week moving average down 0.1 points to 5.0 per cent.
Short-term economic confidence (next 12 months) increased by 1.8 points, while medium-term economic confidence (next five years) increased by 3.9 points, according to ANZ-Roy Morgan data.
This rating is based on more than 1,000 interviews conducted online and over the telephone during the week to Sunday.
"Households are feeling more confident"
One of the contributors believed to be influencing this uptick of confidence is the perception that the Reserve Bank of Australia (RBA) will cut interest rates at the next meeting (17–18 February).
ANZ economist Sophia Angala said: “Households are feeling more confident about the economic outlook, with short-term economic confidence rising to its highest level since April 2022 (before the first rate hike in May 2022), while economic confidence over the next five years reached a 12-month high.
“The decline in weekly inflation expectations and the broad-based lift across the subindices may have been influenced by discussion that the RBA could cut rates at its February meeting.
“This comes after the quarterly CPI indicator showed that the RBA’s preferred measure of inflation, the trimmed mean, printed below RBA forecasts in Q4.”
Rate cut speculation grows
All four major banks are now forecasting a February cut, after National Australian Bank (NAB) revised its cash rate forecast based on the release of better-than-expected Consumer Price Index data from the Reserve Bank of Australia (RBA).
At the time, NAB’s group chief executive Alan Oster said the inflation data sets up a “likely downward revision to the inflation profile”.
This now makes February the most likely starting point for a gradual easing in interest rates,” Oster said.
“While the labour market remains strong, we do not see current conditions as inflationary. However, the RBA’s growing confidence will need to come in part from a reassessment of tightness in the labour market.”
Meanwhile, Bendigo chief economist David Robertson described the chances of a February cut as 80–90 per cent likely in the non-major's economic update, released on Wednesday (5 February 2025).
“We’ve flagged for over a year now the view that the RBA would be cutting rates in the first half of 2025. The fourth quarter CPI data out last week clearly supported that timing, bringing forward the first cut from May most likely to February,” Robertson said.
“Core inflation fell to below both our and the RBA’s forecasts in Q4, dropping to 3.2 per cent. And with underlying inflation running at only 0.5 per cent in the fourth quarter, everything is on track for the RBA target to be met this year.
“The monthly indicator for December was even more benign, showing the RBA’s preferred core measure (the Trimmed Mean) ended 2024 at 2.7 per cent. So this faster progress has the market rating a February 18 rate cut at around an 80 – 90 per cent chance.”
JOIN THE DISCUSSION