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Retailers react to rate stay

 

money, coins, dollarThe Reserve Bank of Australia (RBA) has again left cash rates unchanged at 2.5 per cent, drawing mixed reactions from national retail bodies.

The cash rate has remained steady for 13 months, the longest period of interest rate stability since 2006.

RBA governor, Glenn Stevens, said in a statement after the September board meeting that low interest rates are helping support economic growth, but the Australian Retail Association (ARA), said the decision to keep the cash rate on hold does little to support consumer confidence and jobs growth.

ARA executive director, Russell Zimmerman, said despite a small uplift in recent retail sales figures, consumer confidence remains extremely fragile.

“Worsening employment figures are also painting a picture of an economy needing monetary support.

“Lowering interest rates today would have been a supportive step in the right direction for the retail sector and jobs but unfortunately this wasn’t the reality.

“Given the current fiscal tightening of the economy to balance the budget, retailers believe the RBA will need to continue to support the economy via low interest rates for some time. The RBA remains one of the few central banks able to offer that support to the economy globally,” he said.

On the flip side, Margy Osmond, CEO of the Australian Retailers Association (ANRA), said the retail sector welcomed the RBA’s steadfast approach to providing stability to Australian households.

“There’s no doubt the retail sector is benefiting from the current period of steady interest rates, which is assisting a much needed boost in confidence.

“Australian Bureau of Statistics retail trade data for July will be released on Thursday giving retailers an indication if June’s strength will continue, and momentum will carry forward in the second half of the year. If this is the case, we would anticipate retail sales to grow by around six per cent (year on year) by the end of the year.

“Looking to the remainder of the year, the retail sector will be keeping a watchful eye on economic data in the hope of improving economic activity and a stronger labour market,” said Osmond.

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