BUSINESS groups have criticised the Reserve Bank of Australia (RBA) for not lowering interest rates at today’s monthly board meeting.
The Australian Retailers Association claims retailers are reeling after the RBA Board’s decision to leave the cash rate unchanged at 4.25 per cent.
Executive director Russell Zimmerman warns it is a ‘shocking blow’ for businesses that are ‘desperate’ to stimulate consumer spending and save jobs in an industry that employs more than 1.2 million Australians.
“Over the past 12 months there have been more store closures and retailers going into administration than I’ve seen over the past 30 years. This has a devastating impact on jobs, including employment for those who need the flexible working environment retail offers such as students and working parents,” he says.
“Retailers are clearly bearing the burden of weak consumer sentiment on behalf of the rest of the economy and with consumers heading into February, which is always the toughest time for retailers as credit card bills roll in from Christmas and back to school costs keep household budgets tight.”
The Real Estate Institute of Queensland (REIQ) labelled the RBA’s lack of lenience as a missed opportunity.
“It is disappointing that the opportunity was not taken by the Reserve to reduce rates today to boost confidence levels across the board, especially in those sectors of the economy that are struggling,” says REIQ chief Anton Kardash.
“Many small businesses have been hamstrung by higher loan rates since the start of the GFC, which is stymieing their potential to grow. Small businesses are (also) often overshadowed by the flashier, more lucrative, sectors but they actually provide half (of) this country’s private sector jobs and deserve rate relief as much as anyone else.”
RBA governor Glenn Stevens defends the Board’s decision, saying interest rates for borrowers have already fallen to near their medium-term average.
“With growth expected to be close to trend and inflation close to target, the Board judged that the setting of monetary policy was appropriate for the moment,” he says.
“Should demand conditions weaken materially, the inflation outlook would provide scope for easier monetary policy.”