SYDNEY, Jan 17 Reuters A measure of Australian consumer sentiment rose in January for the second straight month, as a break in a painful cycle of interest rate rises likely provided temporary relief for borrowers.

The WestpacMelbourne Institute index of consumer sentiment released on Tuesday rose 5.0 in January, the largest monthly gain since April 2021 and building on a gain of 3.0 in December. However, the index reading of 84.3 still means pessimists greatly outnumber optimists.

Westpac chief economist Bill Evans said one likely explanation for the lift in confidence is that January is the first month that did not see an interest rate hike by the Reserve Bank of Australia since April.

While that was because there was no RBA Board meeting in the month rather than an explicit decision by the Bank to leave rates unchanged, the break in the tightening cycle looks to have provided some relief, said Evans.

If so, we should be cautious about reading the January sentiment rise as part of a continuing trend.

The RBA has raised rates by a whopping 300 basis points to a decadehigh of 3.10 since May when they were at a record low of 0.1.

Futures have priced in a twothird probability of an additional 25basispoint hike in the February policy meeting, and imply a peak rate of around 3.76.

For respondents with a mortgage, confidence jumped 10.7 compared to a 6.6 rise for renters and a 8.5 gain for those who own their homes outright.

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