The Reserve Bank of Australia’s (RBA) decision today to cut interest rates to a record-low 2.25 per cent has been welcomed by Australian retailers.In a statement on the decision, RBA governor Glenn Stevens noted available information suggests growth is continuing at below-trend pace, with domestic demand growth overall quite weak.
The RBA’s assessment is that output growth will probably remain a little below trend for longer, he added, while the rate of unemployment will peak a little higher than earlier expected, with the economy likely to be “operating with a degree of spare capacity for some time yet”.
The rate cut is expected to add further support to demand, “so as to foster sustainable growth and inflation outcomes consistent with the target”, Stevens further stated.
Australian National Retailers Association CEO Anna McPhee stated the “retail sector welcomes the sensible approach taken by the RBA”.
“Recent falls in fuel prices have had a positive impact on household budgets and the RBA’s willingness to lower the cash rate and encourage growth will provide important support to consumer confidence,” McPhee stated.
“The latest sentiment reading suggests consumers need to feel more confident about a range of economic factors before we see further improvements to activity in the retail sector and reap the recurring benefits this delivers to the economy more broadly.”
Australian Retailers Association executive director Russell Zimmerman said retailers have been waiting for the outcome for some time.
“This decision comes after a drop in fuel costs and the government’s recently announced small business tax cuts, which we hope will also help to overcome mixed international and Australian economic news,” Zimmerman commented.
“The ARA also asks banks to pass on this rate cut in full to consumers and businesses.
“We’re optimistic that the RBA’s decision will provide retailers with some much needed relief and allow them to start the new year with confidence.”
