Retailers have mixed feelings about the Reserve Bank’s decision to leave the cash rate unchanged at 3 per cent.
According to Glenn Stevens, RBA governor, sentiment continues to improve.
“In Australia, most indicators available for this meeting suggest that growth was close to trend in 2012, led by very large increases in capital spending in the resources sector, while some other sectors experienced weaker conditions,” he said.
“Looking ahead, the peak in resource investment is approaching. As it does, there will be more scope for some other areas of demand to strengthen.”
The National Retail Association have endorsed the RBA’s decision saying this will provide room to move should economic conditions deteriorate during 2013.
NRA chief executive officer Trevor Evans said retailers understood the need for the RBA to get its monetary policy decisions right, including delivering stimulus at precisely the right time.
“We have said on previous occasions that that there will almost certainly need to be rate cuts on a number of occasions throughout 2013,” he said.
“However, with rates already sitting at the ‘emergency’ levels of the global financial crisis, the RBA is restricted in how much lower it can move. With this in mind, we endorse the decision to wait for more information before lowering rates again.
“The RBA has left itself room to move should it be confronted with a further collapse in consumer sentiment later in the year.”
On the other hand following the decision, the Australian National Retailers Association (ANRA) has anticipated it’s an indication that it will be a slow year for 2013 as the RBA has taken the ‘wait and see’ approach.
“Retailers have been holding out for the elusive ‘recovery’, it’s unlikely we will have seen that in 2012. With the traditional impact of an election potentially slowing consumer spending in 2013, it may be 12 – 18 months before the retail sector rebounds,” Margy Osmond, ANRA CEO, said.
“Ideally there will be a smooth run into the election in September, Australians will feel secure, they will recognise the strength of the economy and the Reserve Bank will make cuts through the year to release discretionary income and consumers will return to the shops. That would be a welcome result for 2013.”