Interest rates could peak at 4.1% amid sinking consumer confidence in Australia, says NAB

Major bank believes business conditions and confidence are improving as it sets cash rate prediction higher than other banks

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One of Australia's largest banks has lifted its forecast for the peak cash rate to 4.1%, as new figures show consumer confidence is sinking and small businesses are struggling with rising costs, even as larger firms report a positive start to 2023.

Westpac and the Melbourne Institute's latest monthly survey showed confidence dropping by 6.9% in February to 78.5 points. Excluding a low of 78 in November, you would need to go back to the depths of the pandemic or all the way back to the 1990s recession to find a lower reading, St George Bank said.

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