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RBA's interest rate cut timely for a jolly Christmas - rate cut to flow through economy boosting retail spend

Peak retail industry body the Australian Retailers Association (ARA) said the Reserve Bank of Australia's (RBA) decision to cut the cash rate by one percentage point today is welcome and long awaited news for retailers.

ARA Executive Director Richard Evans said that the second cut in two months is great news for consumers and the effects should flow through the economy immediately with consumer sentiment to turn in time for the 2008 Christmas season.

"Regardless of whether banks pass on this interest rate cut, the RBA's decision today is a very strong sign that our leading financial regulators believe the underlying foundations of the Australian economy is strong.

"Despite unstable global economic conditions, Australia is weathering the storm from overseas. This will help turn consumer confidence around and start the upwards trend for consumer spending after successive months of stagnant and declining growth. This is great news for consumers and even better news for retailers hard hit by months of reduced consumer demand.

"It is time for the narrative from government and media to change as the Australian economy receives a boost. The damage caused by decreases in retail sales and turnover will require positive narrative from Canberra and a government focus on economic conditions. Retail is the barometer of the economy and with consumer sentiment at its lowest since 1992 we hope today's decision changes conditions.

"We were alarmed early this year by the RBA's knee jerk reaction with successive rate increases and called for a steady hand. The ARA has said all along that the rate increases in November 2007 were yet to be felt through the economy when the premature and damaging February and March 2008 rate increases were announced - unfortunately our predictions were correct.

"Today's decision by the RBA shows it has again responded to retailers and consumers and continues to listen to those battling in this economy and is allowing the natural market forces to correct," 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.

For interview opportunities with ARA Executive Director Richard Evans contact:
Kath Christie, ARA Policy & Media T: 0422 293 544 E: kath.christie@retail.org.au

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