The cries of retailers to cut interest rates have been left unheard as the Reserve Bank of Australia (RBA) has decided to leave it unchanged at 4.75 per cent.
RBA governor Glenn Stevens said the decision to hold the cash rate is due to conditions in global financial markets, which have been “very unsettled” over recent weeks, particularly in Europe and the United States, making the outlook less clear than earlier in the year.
“Some temporary impediments that had contributed to a slowing in growth in some countries over recent months, such as the supply-chain disruptions from the Japanese earthquake and the dampening effects of rising commodity prices, are lessening,” he said.
“But the uncertainty and financial volatility is reducing confidence and may result in more cautious behaviour by firms and households in major countries. A number of forecasters have scaled back their global growth estimates over the past couple of months.”
As a result of this, the Australian Retailers Association (ARA) have claimed that the RBA’s decision will continue to leave retailers struggling as consumers face another month of seeing household budgets stretched.
ARA executive director Russell Zimmerman said while the decision to leave the cash rate unchanged may have been a response to growth in parts of the economy and other factors such as inflation, the retail sector is left on dangerous territory as consumers retract their spending even further.
“Consumer confidence is at an all time low, which has left the retail sector in the negative as year on year trade figures show declines across categories which rely on discretionary spend,” he said.
“Key events such as spring racing and the lead up to Christmas would usually see retailers employ more staff, bring in more stock and generally seize opportunities to post some healthy growth as consumers restock their wardrobes and start shopping for presents.
“However, with more pressure than ever on household budgets as a result of taxes, mortgage stress and the soaring cost of living, retailers will be reigning in on stock availability and staffing levels.
“In light of a struggling sector, retailers can only live in the hope that the strain of interest rates will be eased for consumers in time for the festive season by way of a rate cut in October.”
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