The RBA met this week and decided to continue to hold the cash rate at its 12-year high, a relief for retailers expecting a further hike.
The ARA has said that retailers are welcoming the RBA’s decision to continue to hold cash rates at 4.35 percent.
This week, the RBA met for the first of eight meetings scheduled in 2024 in its first meeting since November. In a monetary policy statement, it was revealed that the Board decided to leave the cash rate target unchanged at 4.35 percent.
The RBA warns that although inflation is appearing to ease, uncertainty still underlays their forecasts and decisions.
“While there are encouraging signs, the economic outlook is uncertain and the Board remains highly attentive to inflation risks,” read the statement.
“Goods price inflation was lower than the RBA’s November forecasts. It has continued to ease, reflecting the resolution of earlier global supply chain disruptions and a moderation in domestic demand for goods. Services price inflation, however, declined at a more gradual pace in line with the RBA’s earlier forecasts and remains high. This is consistent with continuing excess demand in the economy and strong domestic cost pressures, both for labour and non-labour inputs.”
ARA CEO Paul Zahra said February’s rate decision will give the retail industry a sense of “cautious optimism” after subdued retail trade performance in December.
“We’re pleased to see the RBA provide some much-needed reprieve for consumers and businesses to set the tone for the beginning of 2024,” Mr Zahra said.
“Today’s decision provides some short-term certainty for Australians and businesses, with the cash rate remaining stable at 4.35 percent since November.
“At a time of immense financial pressure and hardship for most– avoiding another cash rate increase will positively impact spending and retail operations.”