Aust markets dip on US rate cut: Economy round-up

The 0.25% interest rate cut announced by the US Federal Reserve overnight disappointed markets hoping for a heftier cut, triggering selling on markets there and in Australia this morning.

At 12.35pm the S&P/ASX200 is down 1% on yesterday’s close to 6615.2, after the US Dow Jones Industrial Average dropped more the 2% overnight.

But if the markets are spooked, it appears Australian consumers most decidedly are not, with personal finance commitments up a strong 7.7% in October, thanks primarily to a 9.4% rise in credit card spending.

A generally positive consumer outlook is also reflected in today’s Westpac/Melbourne Institute Consumer Sentiment Index, which is up 1.8% for the month of December. Despite the current financial market wobbles the consumer confidence in December is currently 5.9% higher than this time last year, and 7.9% up on last year’s average.

And the Reserve Bank of Australia’s new “glasnost” policy has revealed some interesting historical titbits, with minutes of an RBA Board meeting from June throwing doubts on former prime minister John Howard’s claims that WorkChoices had helped hold down wage growth.

Discussing how workplace law changes over the past decade had contributed to wages restraint, the board reached the view that “it was difficult to assess the effect on wage outcomes and labour supply of recent legislative changes, including the WorkChoices legislation”.