Consumer confidence is up by 1.6 percentage points this week, as households crossed their collective fingers for the rate pause delivered this afternoon from the RBA.

As expected, the RBA decided to leave the cash rate target unchanged at 3.60 per cent this afternoon.

“The Board recognises that monetary policy operates with a lag and that the full effect of this substantial increase in interest rates is yet to be felt,” Philip Lowe said.

“The Board took the decision to hold interest rates steady this month to provide additional time to assess the impact of the increase in interest rates to date and the economic outlook.”

Lowe did, however, point to future rate rises as an inevitability.

“The Board expects that some further tightening of monetary policy may well be needed to ensure that inflation returns to target,” he said.

“The decision to hold interest rates steady this month provides the Board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty.

“In assessing when and how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market.”

Before this decision was announced, the ANZ-Roy Morgan Consumer Confidence index jumped to 78.2, however has remained under 80 for five straight week, a streak not seen since the 1990-91 recession.

Consumer confidence is now 15.2 points lower than it was this time a year ago.

“Confidence in financial conditions, particularly current financial conditions, is now trending lower than it was during the initial Covid-19 outbreak, as ongoing inflation and the rapid rise in the cash rate bites household budgets,” ANZ senior economist Adelaide Timbrell said.

The lift is purely based on the hope that the Reserve Bank may bring an end to a year of constant rate rises.

Economists were previously split on the chances of an eleventh-straight rate rise.

Both ANZ and NAB still expect the RBA to hike rates by 25 basis points to 3.85 per cent, while CBA and Westpac both expect the RBA to hold.