The Reserve Bank of Australia (RBA) has again left the official cash rate unchanged at 2.5%, with retailers hopeful the decision will help stimulate pre-Christmas sales.The RBA has now maintained the 2.5 per cent cash rate since August of last year.
The decision comes in the wake of strong September retail sales figures released today by the Australian Bureau of Statistics (ABS).
However, countering the positive economic news, revised ABS unemployment figures have seen the unemployment rate for September lift from 6.1 per cent to 6.2 per cent.
RBA governor Glenn Stevens noted in his statement on the decision that the RBA “expects growth to be a little below trend for the next several quarters”.
Stevens stated it will probably be some time yet before unemployment declines consistently, stating growth in wages is expected to remain relatively modest over the period ahead, which in turn should keep inflation consistent with the 2-3 per cent target, even with lower levels of the exchange rate.
As in previous months, Stevens concluded his statement by again noting “continued accommodative monetary policy should provide support to demand and help growth to strengthen over time”.
With monetary policy “appropriately configured to foster sustainable growth in demand” and inflation outcomes “consistent with the target”, Stevens stated the “most prudent course is likely to be a period of stability in interest rates”.
The Australian Retailers Association (ARA) has stated retailers are hopeful the decision to keep the cash rate on hold will “provide enough stability to stimulate pre-Christmas sales as the crucial festive season fast approaches”.
“While retailers didn’t receive their Christmas wish of an interest rate cut today, the industry remains optimistic that the festive trading period will soon be in full swing and the stable cash rate may encourage consumers to loosen their purse strings early-mid-November in the lead up to Christmas,” ARA executive director Russell Zimmerman commented.
“While in an ideal world the RBA would be able to lower interest rates even further to support small businesses, the fact that the cash rate has remained low for some time now has seen retail trade figures increase (albeit slightly) month on month.”