Economy

Australian consumer sentiment slumps after RBA hike

Australia's consumer sentiment index fell sharply after the Reserve Bank of Australia raised rates, while Westpac expects another hike in November.

Despite the slump in sentiment, Westpac believes inflation risk still outweighs demand weakness, which could keep the RBA from pausing its hiking cycle.

For beginners Raising the key interest rate makes borrowing more expensive and cools consumer demand, so sentiment surveys are one gauge central banks use to judge the effect of decisions they have already made.