By Aimee Chanthadavong
The Reserve Bank (RBA) has announced that it will leave the cash rate unchanged.
The National Retail Association (NRA) has applauded the RBA’s decision and has called on major banks to recognise the same fragility in the economy that had prompted the RBA to hold its position.
NRA executive director Gary Black told Retalibiz the speculation and the uncertainty of rate rises can have a negative impact on retailers.
“When you talk to retailers who have been in the business for a long time, they’ll tell you they look into factors like interest rates, unemployment levels and exchange rate as being data that have significant influences on the performance on the retail sector,” he said.
“The added dimension to interest rates is that it’s not only the level of interest rates that can negatively impact retail but it’s also the speculations about rate rises and this uncertainty tends to feed into consumer confidence, particularly for retailers who rely on discretionary spending.”
According to Black, retailers continue to face their most difficult trading conditions in decades.
“Rather than pressing ahead with their threatened rate increases, the major banks must understand that the retail sector – Australia’s largest employer – continues to struggle,” he said in a statement.
Black also noted that this year’s Christmas period will be a crucial time for retailers.
“This Christmas is shaping to be one of the most critical time for retailers for some time because most retailers rated poorly throughout the year and the expected upturn in retail trade that was forecast to occur in the second half of this year has not eventuated,” he said.
“Consequently retailers remain in the doldrums and it’s going to be extremely important that consumers loosen their purse strings and spend at normal levels of Christmas.”