Australian consumer spending continued its gradual recovery in February and households are likely to find support from the anticipated interest rate cuts in response to the recently announced US tariffs, ANZ Research said in a Friday note.
Household spending rose 0.2% month on month in February, following an upwardly revised 0.5% increase in January. Discretionary spending led the increase, with spending in that category up 0.3%. This is a "welcome sign" given that there were no significant sales events during the month, ANZ Research said.
Looking ahead, the Reserve Bank of Australia (RBA) is expected to adopt a more aggressive easing stance, which would address any financial strain on households in the aftermath of the Trump administration's new tariffs.
As markets assess the full scale of this policy, uncertainties are likely to weigh on domestic consumer confidence. But that would be offset by the expected rate cuts from the RBA. ANZ Research now pencils in three rate cuts during the year, those being in May, July, and August.
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