The Age --- Page: B2 : 15 February 2007 Original article by Leon Gettler
ABIX Summary
Rising consumer sentiment in Australia validates concerns about inflationary pressures and makes an interest rate cut less likely. The Westpac Banking and Institute of Applied Economic & Social Research "Consumer Sentiment Index" increased 1.7% to 111.4 in February 2007. The index is 3.2% higher than when the Reserve Bank of Australia started increasing interest rates in February 2006. Westpac Banking chief economist, Bill Evans, associated this trend with a 31-year low in unemployment and the fact that expectations of an interest rate rise in February 2007 did not eventuate. The rise in consumer sentiment may be an indication of inflationary pressures and coincides with data from National Australia Bank as well as the St George Bank and Australian Chamber of Commerce & Industry "Business Expectations Survey" showing strong wages growth. Evans expects interest rates to remain unchanged for the time being.
