The RBA’s decision to hold cash rates for December is welcomed by retailers but some critics say its not good enough.
The Reserve Bank of Australia’s (RBA) has decided today to hold cash rates at 4.35 percent in what is likely to be its final monetary decision before its next meeting in February.
“High inflation is weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment,” read a statement from new Governor Michele Bullock. “Holding the cash rate steady at this meeting will allow time to assess the impact of the increases in interest rates on demand, inflation and the labour market.”
The Australian Retailers Association (ARA), has welcomed the decision with ARA CEO Paul Zahra saying it gives the retail industry “cautious optimism” heading into the final few trading weeks before Christmas and the highly important Boxing Day and post-Christmas period.
“We’re pleased to see the RBA provide some much-needed reprieve for consumers and businesses during the busiest trading season of the year,” Mr Zahra said.
“Today’s decision will see the cash rate paused for at least two months, which will certainly help bolster business and consumer confidence in the vital Christmas and Boxing Day trading weeks to come.
“Most discretionary retailers make up to two thirds of their profits at this time of year, and a second consecutive increase would have had a further negative impact on the rest of the year for retailers who are already battling a spending slowdown.”
The National Retailers Association said the RBA’s decision to hold interest rates while acceptable, isn’t good enough for retailers struggling to make it through Christmas.
“Retailers have been waiting all year for the big pay out that comes from pre/post-Christmas sales, but the interest rate rise in November was a heavy blow to consumer confidence,” Deputy CEO Lindsay Carroll said.
“Retailers brought their Black Friday and Cyber Monday bargains forward by three weeks in anticipation that last month’s interest rate hike would affect spending over Christmas.
“We have predicted $63 billion in retail spend by the end of Christmas, and while that number looks big, it will be flat earnings for the sector compared to last year,” she said.
With such a big spend across BFCM, retailers are predicting a quieter than usual Christmas period with the peak of the sales season behind us.