Retail and housing sectors come out in support of yesterday's rate decision, hoping the extended pause will boost confidence
August 3, 2011
Industry bodies have come out in support of yesterday’s decision by the Reserve Bank of Australia to leave interest rates on hold at 4.75 percent, with the retail and housing sectors hoping the extended pause will boost confidence.
The Australian Retailers Association (ARA) says it has been an anxious wait for retailers given the RBA had to delicately balance factors such as inflation, consumer sentiment and the current two-speed economy.
“Consumer confidence is at an all time low with consumers too spooked to spend,” ARA Executive Director Russell Zimmerman says.
He says this has left the retail sector unable to post any healthy growth and looking seriously at their staffing levels.
“Consumers are facing more pressure than ever on their household budgets, and any more strain would have been detrimental as they struggle with the soaring cost of living and uncertainty around the flow on effects of the carbon tax.”
Australian Industry Group Chief Executive, Heather Ridout, agrees that the move was a “no-brainer”.
“It will be received with relief by the bulk of the Australian economy which is experiencing tough trading conditions,” Ridout says.
BREATHING SPACE FOR BUILDING
The decision to leave rates on hold for the ninth straight month will also allow some much-needed breathing space for the country’s construction industry, according to Master Builders.
“Master Builders believes the Reserve Bank’s decision is right for the building and construction industry which is stuck in the slow lane of the two speed economy,” CEO Wilhelm Harnisch says.
He says the interest rate-sensitive residential building industry is relying on an extended pause in Reserve Bank monetary policy to encourage an upswing.
“A further rate rise at this point in the building industry cycle would have been a major negative for consumer confidence and for a struggling building industry.
“This is one of the risks that the RBA will need to manage when it considers the need to lift rates again.”