For the fifth successive time since December, the Reserve Bank of Australia has decided to leave the cash rate unchanged at 4.75 per cent despite signs of consumer price inflation.
“The Bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the year ahead,” Glen Stevens, RBA Governor, said
“While the rising exchange rate will be helping to hold down prices for some consumer products over the coming few quarters, over the longer term inflation can be expected to increase somewhat if economic conditions evolve broadly as expected.”
For the mean time, this news has been welcomed by both the Australian Retailers Association (ARA) and the Australian National Retailers Association (NRA) that have suggested keeping the cash rate stable for retailers as to continue their recovery.
ARA executive director Russell Zimmerman said retail trade was still suffering and the RBA was right to look beyond headline inflation driven by the effect of natural disasters over the summer months.
“Retailers are calling on the RBA to continue its freeze on interest rates until at least the third quarter as frugal consumer behaviour is expected to increase with the threat of new taxes on the horizon,” he said.
ANRA CEO Margy Osmond agreed saying that retailers will continue to hold their breath, knowing any increase in that rate will affect the sector.
“The sector is well aware that consumer behaviour has shifted, that Australians now are choosing to save rather than spend and utility and petrol prices are also taking their toll on the family budget, leaving less cash in hand to indulge in shopping,” she said.
“Any changes in the Budget that will force families to tighten their own budgets will have a direct impact on the retail sector.”