In announcing no change to official interest rates at this week’s board meeting and in his subsequent speech to the National Press Club, Reserve Bank governor Philip Lowe indicated he is hopeful that the bank’s three rate cuts last year will sufficiently improve the financial position of households to trigger a recovery in consumer spending.

If spending does strengthen, then, as Lowe indicated, it is reasonable to expect that businesses would follow with increased investment – although the consensus among economists is less optimistic. On this view, without further rate cuts the economy could fall short of the bank’s forecast of materially faster growth.