The RBA has paused interest rates at 4.1% with the National Retail Association welcoming the opportunity for retailers to find their bearings.
Today, The Reserve Bank has decided to pause its seemingly never ending rates increases at 4.1 percent. Since May last year, the RBA has risen interest rates every month with the exception of April this year, and today’s pause. “The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so,” said RBA governor Philip Lowe.
“In light of this and the uncertainty surrounding the economic outlook, the board decided to hold interest rates steady this month. This will provide some time to assess the impact of the increase in interest rates to date and the economic outlook.”
National Retail Association CEO Greg Griffith has welcomed the RBA’s decision to pause interest rates this month, allowing the sector to make use of the positive momentum gained in May.
“Australian Bureau of Statistics data shows that Mother’s Day spending in May gave retailers’ some relief as promotional sales encouraged consumers to spend on florists and cosmetic retailers,” Griffith said.
The substantial minimum wage increase that also took effect last week, while welcomed by households, is a cause of concern for retailers, says Griffith
“The pause in interest rates immediately follows the wage and superannuation guarantee increases that kicked in last Saturday (1 July). We predict the payroll increase of 5.75 percent could force smaller retailers to shed labour costs, but the rates reprieve might give them time to find creative solutions to deal with increasing business costs.
“The resilience of the Australian retail sector speaks for itself, and we urge businesses to do what they can to boost morale and offer their customers experiences that inspire loyalty even through the inflation storm,” Mr. Griffith said.
RBA governor Philip Lowe has warned that depending on how things develop, further tightening may be required to ensure that inflation returns to target in a reasonable timeframe.
“We ask the RBA to stay their hand for another couple of months so businesses can find their bearings before dealing with another rate increase,” says Griffith on behalf of the National Retail Association.
“Retailers have faced several blows and while the rates pause is a step in the right direction, we urge the Government to turn its attention to businesses that are struggling to stay afloat.”
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