Not a good finish. The Westpac/Melbourne Institute Index of Consumer Sentiment is a fitting signal for what has been an unhappy year for the Federal Government.

The improvement in consumer confidence suggested by the previous couple of readings has come to an end. The people it seems are unimpressed by the Australian economy actually performing better than almost any other in the developed world and are apprehensive about the future. It is the same kind of message that the opinion polls have been giving of late.

The market in the last week has been sending the same kind of message. The Crikey Election Indicator has Labor’s chances on the slide again

Back in mid-November Labor’s chances were put at over 33%.

More interest rate cuts needed? The two recent reductions in official interest rates by the Reserve Bank have surprisingly had no impact at all on public confidence in general and in the government in particular.

The Bank will not be concerning itself with the latter but must be worrying about the former.

A further cut at the first meeting of the Bank board for the new year — in February unless something really untoward happens in Europe — is very much on the cards.

Peter Fray

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