Australia's Consumer Confidence Slips Again After September Rate Rise

Australian consumer confidence fell 4.7% to 80.4 in October after the Reserve Bank of Australia raised its cash rate target to 4.60 per cent. The October reading from the Westpac-Melbourne Institute index captures the direct response to the September tightening cycle. The Guardian

The survey was conducted between 28 September and 1 October, straddling the Board decision on 29 September. Respondents interviewed after the decision returned an index reading of 67.2. That level was the lowest since the late 1990s.

The Reserve Bank Board increased the cash rate target, the benchmark rate that guides borrowing costs, by 25 basis points (0.25 percentage points) to 4.60 per cent on 29 September, with effect from 30 September. It was the fourth increase of the year. An earlier decision in 2026 had taken the target to 4.10 per cent. RBA

A second weekly measure showed a similar fall. The ANZ-Roy Morgan consumer survey fell about 5% to 67.1 points.

The weakness was concentrated among borrowers. Mortgage holders were the most pessimistic home-ownership group at 77 index points. Renter sentiment was unchanged at 84.8 points in October. Outright owners sit between those groups in the published breakdown.

The October fall follows several swings. The index fell 2.9% to 80.6 in June, then gained 4.1% in July and 6.0% to 88.9 in August when rates were held. It then dropped 5.2% to 84.4 in the September release before the latest decline to 80.4. Reuters Westpac head of Australian macro-forecasting Matthew Hassan said consumer sentiment had been extremely weak for the longest period since the early-1990s recession. Cumulatively, confidence is down about 20% since the RBA lifted rates to the highest levels since 2011.

The broader context here is persistence and timing. The post-decision sub-sample at 67.2 shows a rapid reaction to the September decision. The unchanged renter reading at 84.8 against the sharp borrower fall points to cash-flow pressure as the dividing line. Agreement between the monthly and weekly surveys lowers the chance the move is survey noise.

Looking at what this means for policy assessment, the sequence from August through October will get attention. Confidence rebounded when the Board paused, then fell twice in a row. Focus now turns to forward guidance and household sensitivity to further moves. The next releases will test whether sentiment steadies at this lower range or keeps tracking the late-1990s comparison.