A run of soft economic data could encourage the Reserve Bank to trim the cash rate again next month.
In AMP Capital’s weekly market and economic update, senior economist Bob Cunneen said sluggish business confidence, lacklustre consumer sentiment and a rising unemployment rate make a compelling case for lower interest rates.
“The recent run of soft Australian data justifies another 0.25 per cent interest rate cut to 2.50 per cent in August,” Mr Cunneen said.
According to the Westpac-Melbourne Institute Survey of Consumer Sentiment, the index was basically unchanged in July, falling just 0.1 per cent to 102.1.
While the index shows that optimists continue to outweigh pessimists, sentiment is still significantly weaker than at the start of the year.