Rate cut boost confidence! Australia's August consumer index soared to a three and a half year high.

Australia's consumer confidence index soared in August, following the country's central bank implementing the third interest rate cut of the year and signaling further easing measures. The Reserve Bank of Australia announced on August 12 that it lowered the benchmark interest rate by 25 basis points to 3.6%. A survey released by The Pacific Bank on Tuesday showed that the consumer confidence index rose by 5.7% to 98.5 points, reaching a three and a half year high. Although pessimists still outnumber optimists (the dividing line is at 100 points), the gap is narrowing. Matthew Hassan, The Pacific Bank's director of Australian macroeconomic forecasts, said that the last time Australia's consumer confidence index exceeded 100 points was 42 months ago, making this the second longest pessimistic period in the survey's history, second only to the economic recession in the early 1990s. Hassan stated that the data suggest that "consumers' long-term pessimism may finally be coming to an end," and noted that all subcomponents of the index had shown growth. "Consumers' anxiety about their financial situation has significantly decreased." The Reserve Bank of Australia has already cut interest rates by a total of 75 basis points since the beginning of the year, bringing the cash rate down to 3.6%. Governor Michelle Bullock hinted last week that "a few more rate cuts" would be needed to achieve the central bank's latest forecast targets. Economists expect another rate cut in November, with one more in early next year, ultimately bringing the interest rate down to 3.1%. Hassan indicated that the prospect of further easing measures "seems to have strengthened consumers' expectations of lower mortgage rates, thereby boosting overall market sentiment," and that "consumers' attitudes towards major purchases are beginning to shift towards positive." In Australia, where consumer spending accounts for half of the total economy, policymakers closely monitor household consumption intentions.