SYDNEY, March 26 Reuters Australian consumer sentiment eased from 20month highs in March as worries about the economic outlook and family finances returned to darken the mood, a survey showed on Tuesday.

The WestpacMelbourne Institute index of consumer sentiment slipped 1.8 in March, from February when it jumped 6.2. The index reading of 84.4 showed pessimists outnumbered optimists, much as it has for months now.

Last month we saw some promising signs that the consumer gloom that has dominated over the last two years might finally be starting to lift, said Matthew Hassan, a senior economist at Westpac. The March survey update shows that progress continues to be slow at best.

The survey found a sharp deterioration in mood followed a Reserve Bank of Australia RBA policy meeting last week, even though it kept rates at 4.35 and toned down a warning about the risk of future increases, saying the outlook was finely balanced.

Sentiment amongst those surveyed prior to the decision came in at 94.9, compared to 79.3 afterwards.

The RBA39;s commentary looks to be tempering consumer expectations for interest rates as well, with fears of rate hikes easing but few expecting rate cuts any time soon, said Hassan.

Markets are wagering the next move in rates will be down, albeit not until later in the year.

The survey39;s measure of family finances compared to a year earlier fell 1.4 in March, while the outlook for finances over the next 12 months dropped 1.5.

The outlook for…