BUSINESS SLAMS RBA FOR HOLDING INTEREST RATES

Written on the 5 July 2012

BUSINESS SLAMS RBA FOR HOLDING INTEREST RATES

THE Reserve Bank of Australia (RBA) has left the base borrowing-rate unchanged at 3.5 per cent.

The decision sparked criticism from businesses planning to pass additional costs of the new Carbon Tax onto customers.

The Australian National Retail Association (ANRA) says an interest rate cut was needed to help restore consumer confidence, which it says has been unsettled by the new tax that began on Sunday.

ANRA warns the RBA’s inaction will prevent customers from spending as they wait with “bated breath and sealed wallets for the impact of the carbon price to hit family budgets”.

“It is not yet clear how much the carbon price will carve into family spending, nor how much the promised government assistance families manage it will loosen purse strings,” says ANRA CEO Margy Osmond.

“Unless there is some light at the end of the tunnel for homeowners in the form of future rate cuts, retailers will continue to struggle in light of low consumer confidence and shoppers too concerned about their finances to come in-store.”

Master Builders Queensland also denounced the RBA decision to keep rates on hold, saying it fails to send a strong signal that interest rates will not increase.

“We believe the market is just starting to turn and a further reduction in interest rates would have been a strong incentive for buyers who are holding off,” says construction policy director John Crittall.

However, the bank defends its position and says the outlook for inflation is unaffected by anticipated effects of the Carbon Tax.

“The [RBA] board judged that with inflation expected to be consistent with the target [up to 3 per cent over two years] and growth close to trend but, with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate.” says governor Glenn Stevens in a written statement.

The RBA previously reduced the borrowing rate in May and June by 75 percentage points during the two-month period.


Latest News

BRAMBLES TUMBLES AFTER REDUCING GUIDANCE

BRAMBLES (ASX: BXB) will miss its first-half guidance due to cost pressures at its North America business.

The com...

VILLAGE ROADSHOW PARKS HURT BY DREAMWORLD TRAGEDY

QUEENSLAND visitors to Village Roadshow (ASX: VRL) theme parks have declined 12 per cent in the wake of four deaths a...

ASF UNVEILS TRAFFIC PLANS FOR THE SPIT

A SECOND bridge over the Nerang River is the centrepiece of the ASF Consortium's plan to improve traffic flow ...

BHP AND VALE EDGE CLOSER TO $47.5 BILLION SAMARCO DAM DISASTER SETTLEMENT

BHP Billiton (ASX: BHP) and Brazilian mining company Vale have entered into a preliminary agreement with Brazilian fe...

Related News

CARSALES CEO RETIRES AS NEW COMPETITOR COX FINALISES MERGER

CARSALES will have a new CEO as it takes on a fresh challenger to its crown as the dominant online car sales portal i...

BUSINESS CONFIDENCE AT A SIX-YEAR HIGH

SMALL and medium businesses have entered 2017 with their confidence at a six-year high, building on strong gains m...

CONSUMERS PESSIMISTIC ENTERING 2017

CONSUMER confidence remains at its weakest point since April 2016, according to the latest Westpac Melbourne Institut...

RISE OF STARTUP SUPPORT PROGRAMS NOT AS ROSY AT IT SEEMS

ENTREPRENEURIAL cultivation companies in Australia are appearing quickly, but questions have been raised about whe...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter