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Australians feeling better about life

AAP logoAAP 25/07/2016 By Colin Brinsden, AAP Economics Correspondent

Australians appear to be over the uncertainties that have dogged confidence in recent weeks.

And the possibility of another interest rate cut next month should put an even bigger smile on the face of consumers, as well as retailers.

Consumer confidence rose in the past week, ending four weeks of straight losses as uncertainties surrounding the July 2 federal election were resolved and the initial shock over Britain wanting to leave the European Union waned, leading to calmer financial markets and a strong rebound in shares.

Commonwealth Securities chief economist Craig James said the 0.5 per cent rise in the ANZ-Roy Morgan consumer confidence index released on Tuesday showed consumers were now getting on with life.

"The lift in consumer sentiment ... is clearly good news for consumer-dependent businesses," Mr James said.

Treasurer Scott Morrison believes the strengthening of the architecture of financial markets after the global financial crisis, along with global central banks working together, ensured the volatility over Brexit was relatively short-lived.

Mr Morrison, who has just returned from last weekend's G20 finance ministers meeting in China where Brexit was a main talking point, said the Reserve Bank and Treasury expect its impact on Australia will be limited.

"It is going to take some time for the UK and Europe to sort all this out, but I detected good faith to do just that because the stakes are very high," he told Sydney's 2GB radio.

The Australian election result left Prime Minister Malcolm Turnbull with a much-reduced majority and a Senate with a much larger cross bench.

The world's major credit rating agencies have expressed concerns about the new make-up of parliament preventing much needed budget reforms to get through, although Mr Morrison is also facing opposition from his own coalition back bench over planned changes to superannuation.

These changes to super, including a $500,000 lifetime cap on extra contributions, would save more than half a billion dollars in tax concessions and help get the budget back into balance at a time when Australia's triple-A credit rating is at risk.

"If those savings aren't found in that way they would have to be found in other ways, which I think would be more unfair to other people," Mr Morrison said.

Economists expect the Reserve Bank to consider a cut in the cash rate when its board meets on August 2 should Wednesday's official inflation figures continue to show a lack of price pressures in the economy.

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