Home topics news Source: Spelio on Flickr News News RBA rate cuts spark biggest confidence jump in 42 months of economic pessimism Yajush Gupta August 20, 2025 After 42 months of consumer pessimism, confidence jumped to 98.5, just 1.5 points from positive territory. RBA rate cuts are working, economists say. What’s happening: Australian consumer confidence jumped 5.7% in August to 98.5, reaching its highest level in three and a half years as RBA rate cuts and eased cost-of-living pressures lift household sentiment. Why this matters: The confidence surge suggests Australia’s economic downturn may be nearing its end, with potential flow-on effects for business spending and employment as households become more optimistic about major purchases and the economic outlook. CreditorWatch’s Chief Economist Ivan Colhoun says the confidence jump to 98.5, just 1.5 points below the critical 100 threshold where optimists equal pessimists, reflects the benefits of the latest RBA interest rate cut building on earlier cuts and last year’s income tax reductions. “The jump in confidence to near an optimistic reading on the economy for the first time in nearly four years is welcome news,” Colhoun says. “The near 6% rise in August clearly reflects the benefits of the latest RBA interest rate cut.” Confidence soars nationwide The sentiment improvement was broad-based rather than confined to mortgage holders, with households more optimistic about the economy, unemployment outlook, and major purchases such as housing and big-ticket items. Consumer expectations about unemployment, a reliable leading indicator which fell 2.4% in August, easing concerns