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Fourth successive rate cut spells Christmas cheer economic flow-through to be felt in mid 2009

Peak retail industry body the Australian Retailers Association (ARA) has applauded the Reserve Bank of Australia’s (RBA) decision to further cut the cash rate by 1.0 percentage point today.

ARA Executive Director Richard Evans said the fourth cut in as many months, bringing the cash rate to 4.25 percent, is more great news for families with mortgages who are already benefiting from lowering petrol prices and now look forward to a cash payment from the Federal Government next week.

"The RBA's decision today to cut interest rates yet again indicates our leading financial regulators are listening to retailers hard hit by months of reduced consumer demand. But now we urgently require the interest rates on credit cards to be lowered," Evans said.

"New research has shown consumers will still be using credit in high numbers over the Christmas period and some relief from high interest rates on cards would certainly be feasible.

"This fourth successive rate cut will be a shot in the arm for consumer confidence and will be seen in the market around May/June next year - just when ARA modelling indicates growth will return.

"Hopefully this will help turn consumer confidence around and start the upwards trend for retail spending after successive months of stagnant and declining growth, as confirmed by the 0.2 percent growth in October retail trade figures released today.

 "We now see strong growth to return by September 2009, but the rest of the economy lags three to six months behind in the retail sector cycle. This means there may not be good news for other industries until December 2009/January 2010," Evans said.

For over 104 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia's $292 billion retail sector which employs over 1.2 million people. As an incorporated employer body under the Workplace Relations Act and with a range of member services including business consulting, policy development, advocacy and education, the ARA promotes and protects over 5000 independent and national retailers throughout Australia. Visit www.retail.org.au or call 1300 368 041.

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