Page 3 of 4
A division of Westpac Banking Corporation ABN 33 007 457 141
in the current cycle. The level of that component was 15% higher in 2008 than it iscurrently. Ongoing concern about respondents' future finances is likely to pose headwindsfor future spending patterns.“Not surprisingly, sentiment towards housing improved by a solid 6.5%, while sentimenttowards purchasing a motor vehicle was down by 3%.“The Reserve Bank Board next meets on December 6. Our view has been that the easingcycle which has now begun is likely to be much more measured than the one we saw in2008 when rates were slashed by 300bps over four consecutive meetings. Accordingly, wewould expect the next move to be in February next year when the Bank has had time toassess the impact of the first move; more information is available about the globaleconomy; and further evidence is available on inflation. However, our interpretation of theBank's recent Statement on Monetary Policy is that it is troubled by developments inEurope and, due to a more downbeat assessment of the domestic economy, sees clearroom to cut further. Developments overseas, as we saw in 2008, have the potential tomove the next cut forward to December but, for now, our call remains that the next movewill be 25 bp's in February with a further 50bps in cuts over the course of 2012”, Mr Evanssaid.
Issued by: Westpac Banking Corporation
Matthew Hassan Guay Lim Michael ChuaSenior Economist Melbourne Institute Melbourne InstituteWestpac Banking Corporation Ph: (61-3) 8344 2146 Ph: (61-3) 8344 2144Ph: (61-2) 8254 2100