The Executive Director of the Australian Retailers Association, Russell Zimmerman, said today that the decision by the Reserve Bank of Australia to cut interest rates by 25 basis points would spark consumer spending and help retailers affected by challenging trading conditions.
Commenting on the RBA’s move to cut official rates – which he said was unsurprising given external factors such as trade disruptions and the Coronavirus threat – Mr Zimmerman said he believed the decision should not be interpreted as a sign of structural weakness in the economy.
“Although retailers are doing it tough, it’s important to emphasise today’s announcement does not reflect a deterioration in the retail sector notwithstanding the tough conditions it has faced of late,” Mr Zimmerman said.
Mr Zimmerman called on the big four banks to pass on the rate cut in full, saying it was clear the Reserve Bank had seen a need to stimulate economic activity amid challenges in the external environment.
“It is incumbent on the banks to pass on the cut to consumers in full, rather than treating this as an opportunity for profiteering,” Mr Zimmerman said.
Mr Zimmerman said Australians should be buoyed by the rate relief and spend the extra money, helping boost economic activity and protecting local businesses and jobs.
“We’d emphasise external factors which have largely influenced this decision, notably the impact of Coronavirus and a difficult summer, should not stop consumers from getting out and spending,” Mr Zimmerman added.
Mr Zimmerman said extensive press coverage, speculating about a 50-point rate cut by the US Federal Reserve later this month, underlined the point today’s decision was not solely a reflection on the Australian economy.
“Today’s reduction should be interpreted in the context of globally low interest rates which have been a mainstay since the end of the GFC, and we’d be unsurprised if other central banks follow suit,” Mr Zimmerman concluded.
