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Retailers call for real relief as banks threaten to withhold rate cuts

Peak industry body the Australian Retailers Association (ARA) said retailers and consumers needed significant and immediate relief to come from the expected rate cut next Tuesday after banks recently raised uncertainty about whether they would pass any reduction to the cash rate.

ARA Executive Director Russell Zimmerman said retailers could no longer be expected to shoulder the impact of weak consumer sentiment or banks’ inability to pass on any rate cut to their customers.

“It’s becoming commonplace for retailers to be the losers in interest rate decisions and banks’ inability to pass on rate cuts in a timely manner.

“The reality is retailers need the banks to immediately pass on reductions in the cash rate to give businesses and consumers the significant relief they need.

“The RBA now has the task of considering the banks’ ability to pass on rate cuts in full which may mean a substantial reduction to the cash rate to allow for the bank credit funding gap as well as giving much needed rate relief to consumers.

 “Delays to reducing interest rates and in them being passed onto consumers instantly resonate across the retail sector and contribute to more store closures and job losses.

 “Meanwhile, smaller retailers are also struggling to finance their businesses and need the rate cut themselves to remain afloat and viable.

“November’s unchanged retail trade figures released in January demonstrated the rate cut wasn’t enough for consumers to justify some early Christmas shopping and December figures due out on Monday are likely to confirm Christmas didn’t bring much joy to retailers.

“The RBA has to take into account CPI when making a decision to cut interest rates, however the lower CPI of 3.1 percent reported last week means there’s no reason for the RBA not to cut rates.
“The only way to improve consumer confidence is to relieve stress on their mortgage, however the ARA is also calling on government to do its bit by keeping the cost of living manageable and not load any extra taxes and charges onto consumers in 2012 budgets,” Zimmerman said.

For over 100 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia’s $240 billion retail sector which employs over 1.2 million people. As an incorporated employer body under the Fair Work (Registered Organisations) Act 2009 and with a range of member services including 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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For interview opportunities with ARA Executive Director Russell Zimmerman
contact: Andie McMaster, Media & Communication Officer T: 0408 613 178 E: media@retail.org.au

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