The Reserve Bank of Australia (RBA) has left the official cash rate unchanged at three per cent with signs of emerging confidence and stability in the economy.
The Australian Retailers Association (ARA) executive director Richard Evans said yesterday’s interest rate hold indicated the RBA was seeing signs of a stronger Australian dollar and stock market recovery coupled with a slow emergence of retail recovery.
“The RBA has applied good fiscal policy by holding interest rates at a time when consumers are cashed up and ready to re-enter the market.”
April retail figures released earlier showed a 0.3 per cent growth in retail turnover and continued to show signs of slow recovery. Other business indicators indicated an 8.4 per cent increase in retail trade company profits over the March quarter.
“Consumers are beginning to inject funds back into the market via the retail hub and this is good news for the rest of the economy that typically lags three to six months behind the retail sector,” said Evans.
As long as employment remains under seven per cent, retailers are still expecting improved growth by the September quarter. This means the rest of the economy should expect signs of recovery by early next year, said Evans.
“With low interest rates, low petrol prices and a high Australian dollar, there is a lot of good news for consumers at the moment and retailers are optimistic about the future. But right now they’re working hard to stimulate consumer spend and overcome the negative rhetoric that economists and leaders continue to spruik.
“Yesterday’s interest rate hold is another sign to consumers that the Reserve Bank is confident we are on the road to economic recovery,” said Evans.