New figures suggest the Reserve Bank's latest interest rate cut may have given only fleeting support to the economy, but one major bank doesn't expect it will stop the central bank having to make further reductions in 2017.
The latest National Australia Bank business survey showed confidence in September unchanged from the previous month, despite numerous uncertainties lingering in the global economy.
"However, there is no hint that the RBA's interest rate cut in early August had any further material impact on confidence in September," NAB chief economist Alan Oster said on Tuesday.
Treasurer Scott Morrison on the sidelines of last week's annual International Monetary Fund meeting in Washington said he didn't see much appetite for further interest rate cuts, while stressing any decision on monetary policy would be up to the RBA.
But NAB expects the economy will slow over the next year and into 2018 as the momentum from commodity exports, housing construction and depreciation of the Australian dollar is lost.
"Ongoing low inflation combined with a more subdued growth outlook is expected to jolt the RBA into action," Mr Oster said, anticipating two further 0.25 per cent reductions to a cash rate of just one per cent in the second half of next year.
Consumer confidence has also stabilised after fairly volatile swings in the past two months.
The ANZ-Roy Morgan consumer confidence index eased just 0.3 per cent in the past week.
ANZ senior economic Jo Masters said last week's retail figures showing the strongest spending growth since the beginning of the year was encouraging.
"Above-trend consumer confidence may be translating into stronger spending," she said.
However, it hasn't promoted a rush of demand for home loans with other data showing a three per cent fall in new owner-occupier mortgages in August.
This is despite an analysis by the Housing Industry Association finding housing affordability has shown a modest improvement, helped by the two interest rate reductions by the central bank in May and August.
"Despite not being fully passed on by lenders, these reductions have helped bring the mortgage repayment burden down a little," HIA senior economist Shane Garrett said.
