Monday, July 22, 2024

Retailers welcome cash rate relief

The Reserve Bank of Australia (RBA) has left the cash rate target unchanged at 4.35%.

This has been welcomed by the Australian Retailers Association (ARA).

ARA Chief Industry Affairs Officer Fleur Brown says retailers continue to battle the dual headwinds of a spending downturn coupled with high costs of doing business.

“While interest rates have remained on hold since November, most Australian household budgets remain under significant pressure,” she says.

“April’s retail sales continued to soften, with most discretionary categories remaining in decline – making it all the more important to avoid another cash rate increase.

“Changes to interest rates typically have a lag effect on sales and we’re still experiencing the impacts of interest rate increases last year.”

With June’s cash rate decision now in the books, the RBA will meet again in early August.

Retailers are hopeful an interest rate reduction may be on the horizon, according to the ARA, after the Bank of Canada and the European Central Bank recently cut interest rates for the first time since the pandemic.

The RBA, however, comments: “Inflation is easing but has been doing so more slowly than previously expected and it remains high. The Board expects that it will be some time yet before inflation is sustainably in the target range … The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out. The Board will rely upon the data and the evolving assessment of risks.”

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