How confident must consumers be to trigger rate hikes?

Wednesday, 7 February 2018

Nice little chart with profound implications from Nikko:

Tightening cycles have never started with consumer sentiment below 114. Today it is at 105. Prima facie that suggests we’ll need to see post-GFC highs in consumer sentiment to get the RBA off its butt.

The final point of note is that when the RBA does tighten sentiment always crashes which will be pretty disastrous in today’s muddle-through economy.

Good luck!

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.