Spring brings brighter outlook as rate hike fears fade

Consumers can see light at the end of the tunnel as fears of further interest rate hikes fade.

As signs of improving consumer and business confidence emerged, minutes from the Reserve Bank of Australia's last meeting confirmed the case to lift interest rates again was not explicitly discussed.

Commonwealth Bank head of Australian economics Gareth Aird observed a "less hawkish" tilt to the RBA's rhetoric on its next interest rates moves.

He singled out the removal of a line pushing back on expectations for near-term rate cuts, a shift he viewed as significant and a back-pedal from earlier forward guidance.

"We consider this prudent given the RBA is data dependent and it appears increasingly likely than not that the September quarter trimmed mean consumer price index will come in below the RBA's forecast," Mr Aird wrote in a note.

Overall, he said, the minutes from the September meeting "read like a script from the archetypal two?handed economist".

Members walked through scenarios that would lead to interest rate cuts as well as conditions for rates increasing or staying higher for longer.

A weaker-than-expected economy and households choosing to save rather than spend were risk factors in favour of looser monetary policy.

On the other hand, a material pick-up in household consumption or a failure to log decent productivity growth could add to the case for rates staying higher for longer.

Members also discussed caps on international students, noting the federal government policy would weigh on services exports and economic activity.

The implications for inflation were unclear, however. Fewer students would likely lead to less demand for housing and other services, members said, but also to fewer workers bolstering the supply of goods and services.

An improving outlook for inflation and interest rates is helping buoy consumer confidence, according to Westpac and the Melbourne Institute's index.

While pessimists still outnumber optimists, the headline index rose to 89.8 in October, from 84.6 in September, clocking its best reading since the RBA started hiking rates two and a half years ago.

Consumer attitudes had been supported by interest rate cuts abroad and more promising signs that inflation was moderating locally, Westpac head of macroeconomic forecasting Matthew Hassan said.

"This is the most promising update we have seen over the cycle to date," he said.

Businesses were also feeling more upbeat, National Australia Bank's monthly survey shows.

Promising price signals were picked up in September's release, in welcome news for the RBA's hopes for further progress on inflation.

The outlook for job hunters was also on the rise, with ANZ and Indeed logging a 1.6 per cent increase in job ads in September, their first gain in eight months.