Fresh from the hold on cash rate implemented by the Reserve Bank of Australia (RBA) last week, consumer confidence appeared to have gained in the past two months, according to the latest Westpac-Melbourne Institute consumer sentiment index.

From the 97.1 points seen in January, the index shot up by 4.2 percent to 101.1 points, making the case for the two-month improvement that was preceded by the November and December roll backs on the policy rate decided by the RBA.

In a statement, Westpac chief economist Bill Evans acknowledged that the boost was largely influenced by what transpired in the dying months of 2011.

"This is a strong result and provides some lagged recognition from consumers of the two rate cuts which the Reserve Bank and the commercial banks delivered to mortgage and business borrowers," Evans said.

He added, however, that "the index is still 5.2 per cent below the level of a year ago and 13.6 per cent below its level of two years ago."

Notwithstanding, the indicators pointed to the likelihood that more Australians feel confident that their finance are presently healthy and that the economy is improving despite the unsettling signals being emitted from Europe, analysts said.

The hold last week came as the RBA attempted last year to erect a firewall that is said would ease down inflationary pressures looming in the last quarter of 2011, manifested by the successive rate cut backs that left the cash rate at 4.24 percent.

Apparently confident of the economy's present pace, the RBA board decided for a pause this month despite concerns that the global economic situation was far from improving, a sentiment that prompted major Aussie banks to hike their mortgage rates.

And with that, economists were somewhat surprised that consumers appear to be unfazed by the prospect of higher debt servicing in the immediate months ahead.

Most likely, consumer sentiments may have been influenced by earlier talks of another cuts coming from the RBA right about the time that survey was conducted, Evans said.

"Media coverage gave households strong reason to believe that the Reserve Bank was about to cut interest rates for a third time ... and while there was some speculation that the commercial banks would not pass the cut on in full, respondents were likely buoyed by the prospect of even lower mortgage rates," Evans explained.

While the general sentiment is for the RBA to further push down the cash rate, Evans said that the latest survey would probably make that scenario a bit remote now, meaning a downward movement next month would be unlikely.

Yet he added "we continue to believe that lower rates are required and the best policy response is to move earlier rather than delay."

If that should happen in March, banks should be compelled by that time to pass on the cuts to consumers considering the general condition of the economy, especially that of the labour market, Evans said.