According to Belinda Allen, CommBank's Head of Australian Economics, the economy's continued resilience and rebounding consumer confidence reduce the necessity for additional rate cuts by the Reserve Bank of Australia (RBA). The bank anticipates one more rate reduction in November, but no changes are expected in the RBA's September meeting, suggesting a potential drop in the official cash rate from 3.60% to 3.35%.
The bank's data highlights a 0.3% rise in consumer spending for August, following increases in preceding months. The Household Spending Intentions index shows increased expenditure across nine of twelve categories, notably in utilities, communication, recreation, and education, while spending on insurance, household goods, and food diminished.
Key drivers of this spending surge include the adoption of online services, particularly gaming and streaming, alongside weather-related spending patterns. Sydney experienced its wettest August in 27 years, prompting more spending on food delivery over dining out.
This trend aligns with Australian Bureau of Statistics data, indicating a stronger-than-expected GDP in the June quarter, spurred by consumer activity. RBA Governor Michele Bullock has expressed concern that sustained consumer spending could stifle interest-rate reductions, emphasizing the growing consumer prudence and its unforeseen robustness.
Echoing this sentiment, ANZ's Head of Australian Economics, Adam Boyton, cautions that should consumer spending persist without weakening CPI or labour market indicators, the RBA might maintain the current cash rate, viewing it as "broadly neutral."
With each of the four major banks predicting a pause in rate changes following the RBA's end-of-September meeting, a November cut is still anticipated. Additionally, NAB and Westpac foresee further reductions in early 2026.
