The Australian Retailers Association (ARA) said the Reserve Bank of Australia (RBA) was acting with responsible caution by reducing the cash rate by 25 basis points.
ARA executive director Richard Evans said today’s modest cut, taking the official cash rate to three per cent, indicated the RBA was taking a considered approach and waiting to evaluate the effects of other economic stimuli yet to impact the market.
“Retailers support any RBA or government policy that puts cash back in consumers’ pockets and help stimulate consumer spend,” said Evans.
“While there are still a number of economic influences at play, the RBA is acting with responsible caution by not exhausting their ability to provide further rate cuts that may be necessary in the coming months.
There is a lot of good news for the economy at the moment, including the government stimulus package currently being rolled out, and other interest rate cuts from late last year and early this year typically taking three to six months to flow to the retail sector.
“The six successive rate cuts since September last year have reduced the official cash rate by 425 basis points saving home owners (with an average $350,000 standard variable mortgage) between $700 and $950 per month.
“But many home owners are choosing to reduce their debt by paying off their mortgage at a faster rate.
What we’re saying to consumers is, if you’re saving on your mortgage repayments, by all means use some of this extra cash to reduce your debt but also spend some to inject funds back into the economy and help save jobs,” said Evans.