The head of the Reserve Bank of Australia is hopeful for a better 2024, with consumers also feeling a little more upbeat heading into the festive season.
RBA governor Michele Bullock acknowledged the “hard year” for people dealing with rising interest rates and high inflation while speaking at a conference on Tuesday.
“I’d like to think that we can all take some time to be with our families, and hopefully, things are going to get better next year,” she said when asked for a Christmas message and an outlook for the economy in 2024.
Australia was not falling behind other developed nations, such as the United States, in the fight against rising prices, she said.
“I don’t think we’re behind it all, I think we’ve taken a cautious approach and we’ll continue to watch the data,” she said at the AusPayNet Summit.
The Australian economy has been battered by high inflation and a series of interest rate hikes aimed at bringing it down, with tough financial and economic conditions showing up in consumer confidence surveys.
A monthly index from Westpac-Melbourne Institute Index has recorded its second worst calendar year for sentiment since records began in 1974.
The index is still deep in negative territory though surveying in December was more upbeat, especially from respondents captured after the RBA’s decision to keep interest rates on hold at the last meeting.
Westpac senior economist Matthew Hassan said the weak quarterly growth data may also have helped allay fears that a resilient economy would see domestically-driven price pressures continue.
“However, this is small comfort for Australian consumers that have seen incomes come under extraordinary pressure from a surge in the cost of living, sharply higher interest rates and a rising tax take,” he said.
The private sector also appears to be weakening, with a separate survey of businesses from National Australia Bank unveiling a fall in conditions to its lowest level since early 2022.
Despite the four point fall to nine index points in November, business conditions remain above average.
NAB chief economist Alan Oster said employment was driving the still-strong business conditions, with both trading and profitability closing in on their long-run averages.
“Forward orders softened and taken together with confidence suggest that businesses expect that conditions will weaken further,” Mr Oster said.
Business confidence as tracked by the survey sunk to its lowest level since 2012, barring the pandemic.
“This month’s outcome suggests that growth in December quarter is unlikely to improve from the weak outcome in the September quarter national accounts, and while slower growth will eventually see an easing in inflation pressure, this will lag activity,” Mr Oster said.
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