Retailers have let out a sigh of relief after the Reserve Bank decided to slash the cash rate by another 0.25 per cent, which takes it down to 2.5 per cent.

Glenn Stevens, RBA governor, said the decision comes after recognising the Australian economy has been growing “a bit below trend over the past year”, which is expected to continue in the near term as the economy adjusts to lower levels of mining investment.

This comes after soft retail trade data was released by the Australian Bureau of Statistics on Monday, which showed the retail sector had flat-lined in June and was in need of a rate cut to encourage customers to shop again.

Margy Osmond, Australian National Retailers Association (ANRA) CEO, has described the rate cut as “leg-up” for retailers.

Meanwhile, NRA chief executive officer Trevor Evans said: “It will lend some much-needed aid to Aussie business owners to lock in prospects for economic growth and secure jobs.

However, the real pressure is now on banks to pass on the full 25-point cut to consumers.

“It’s now the responsibility of the banks to fully pass on today’s rate cut and ensure the policy intentions of the RBA can be felt by households and spending can get moving again,” Osmond said.

“Despite the cash rate moving to a new record low, interest rates on mortgages offered by the banks are not at record lows as the banks have consistently failed to pass on the full cut in the official rate to their customers this cycle.

“We would urge the banks to consider the implications that not passing on the full rate cut might have on businesses, and importantly the retail sector, post-election and into the key Christmas period.”