A few horses may fall during the Melbourne Cup tomorrow.
|Is Dunaden or a rate cut the safest bet tommorrow?|
But there is one thing business and consumers alike hope will drop – interest rates.
The Reserve Bank meets tomorrow to discuss dropping the interest rate again.
Last month, the RBA cut the rate by .25 basis points to 3.25 per cent and if the Reserve don’t go for a cut this Melbourne Cup day, it will be the first time in 6 years it has done so.
Australia Retail Association (ARA) Exec Director, Russell Zimmerman, told SmartHouse he is “hopeful Reserve will see some sense” and lower the rate to ensure consumer spending is not hit.
Christmas trading can account for as much as 60% of annual business for some retailers, the ARA boss noted, in the six week holiday period.
“A rate cut would also assist retailers currently struggling like Darrell Leah and Pay For Less,” he added.
If a rate cut is forthcoming, Zimmermann says he hopes “the big banks will also see sense” and pass on the full amount, unlike last month where some banks passed on the rate cut but only in part.
The ARA boss is also calling on some of the ‘Big 4’ banks in particular to show some leadership and pass the rate on early.
20 out of 26 economists are predicting the Reserve will follow precedent and slash rates, reports Business Spectator, with retailers including JB Hi Fi -2.54% and Harvey Norman – 2.76% shares among the worst hit of late, due to their high sensitivity to rate changes.
Speaking of growth, what is the ARA’s predictions for the Christmas period?
Zimmerman would not be drawn on exact figures but said it will be releasing official forecast with Roy Morgan in the coming days.