The Reserve Bank has brought Christmas cheers for retailers by reducing the cash rate by another 0.25 per cent to 3 per cent.
According to Glenn Stevens, RBA governor, said while most indicators suggest that growth has been running close to trend over the past year, led by very large increases in capital spending in the resources sector, while some other sectors have experienced weaker conditions.
“Looking ahead, recent data confirm that the peak in resource investment is approaching. As it does, there will be more scope for some other areas of demand to strengthen,” he said.
But the pressure remains on the banks to pass the rate cut onto consumers.
ARA Executive Director Russell Zimmerman said the decision will provide a much- needed boost for consumers to go shopping, put some presents under the tree and plan for a great Christmas feast, and said there was no excuse for the banks not to immediately pass on the rate cut in full.
“The rate cut decision could not have come at a better time, given consumers need all the cash available to them for the festive season and retailers are relying on this to make the most of Christmas trade,” he said.
“With the RBA being more accommodative in its approach to monetary policy and household budgets clearly stretched beyond reasonable limits, there is absolutely no excuse for the banks not to pass on the full benefit of the 3 per cent interest rate to their customers, including business customers who rely on finance to operate.
"It’s time for banks to show some reason and open their eyes to current economic times, which have caused interest rates to be brought to levels that are manageable for Australian households and businesses.”