ARA issues interest rate warning

The Australian Retailers Association has warned that the Reserve Bank's decision to 'prematurely' raise the official cash rate could have a damaging effect on retailers…
Posted in News

The Australian Retailers Association has warned that the Reserve Bank’s decision to “prematurely” raise the official cash rate to 3.25 percent this month could have a damaging effect on retailers Christmas sales.

ARA executive director Russell Zimmerman said retailers would have liked to have seen “a few more months of solid trade growth” before any interest rate rises.

 
 “This premature rate rise is all too familiar to retailers who warned the RBA not to raise interest rates in early 2008 because they could see consumers were reducing spend,” he said.
 
“The RBA ignored this advice and what followed was over 12 months of reduced consumer demand.
 
“For most of this year, retail recovery has been quite patchy. There was increased monthly trade in January, March, April, May and now August but decreases in February, June and July.
 
Zimmerman said changes to interest rates normally took three to six months to impact the retail market “so the damage from the RBA’s decision could hit retailers just in time for Christmas”.
 
“Retailers are urging the RBA to carefully rethink their interest rate strategy and to hold interest rates between now and Christmas as consumers are still extremely sensitive to any financial or economic pressures. 
 
“This rate rise will take cash away from consumers, damaging retail recovery and stopping funds from flowing through the rest of the economy,” he said.
 

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