“I think when people hear things like, ‘oh, the cost of living is getting better’, they might think that actual relief is in sight and things might be getting a bit cheaper. But in reality things aren’t getting cheaper for them. They don’t need our help any less.”

Household spending ticks up

Many had expected the bank to lower the cash rate in line with inflation — the Consumer Price Index figure for May came in at 2.1 per cent, down from 2.4 per cent in April.

Commonwealth Bank analysis shows household spending rose for a third consecutive month in June, up 0.3 per cent following gains of 0.4 per cent in April and May. Source: Getty / Traceydee Photography

The annual trimmed mean inflation — which doesn’t include major price swings and is the RBA’s preferred measure — was at 2.4 per cent, down from 2.8 per cent in April.

In the March quarter it rose to 5.2 per cent, according to the Australian Bureau of Statistics.

Reasons for optimism, or a crisis still ‘far from over’?

“Around 80 per cent of people haven’t adjusted their repayments [since the cute were introduced],” he said. “So effectively, rather than taking the extra money, people are just paying down debt faster, which suggests that they’re not increasing their spending in response to this cutting interest rates, which tells me that they’re still quite worried and uncertain about the future.”

Australians with mortgages haven’t changed their behaviour significantly since the RBA started introducing rate cuts, according to economist Matt Grudnoff. Source: AAP / Bianca De Marchi

When people are uncertain and worried about the economy, “their first reaction is to kind of pay down debt and get ahead in order to build a buffer against any future kind of shock,” he said.