Westpac and NAB share same outlook, different result

Westpac’s latest consumer sentiment survey has confirmed what everyone already knows, as well as collaborating the National Bank’s economic outlook issued last week.

Both surveys confirm a down turn in the economy as a result of the Japanese and South East Asian recessions and resultant currency crisis.

The real difference between the outlook of the two local banks is the direction of official interest rates: Westpac, along with most other economists, suggest that official rates will stay steady in spite of the pressure on the currency.

NAB however are advocating an increase in official rates of up to 2% in spite of their forecasts of a significant slowdown in the economy.

An increase in rates of that magnitude is likely to do more than just significantly slow the economy. The dreaded “R” word would rapidly become an everyday item on everyone’s lips.