ARA urges RBA to exercise caution before adjusting interest rates

 

PEAK retail industry body the Australian Retailers Association (ARA) said the Reserve Bank of Australia’s (RBA) decision to keep the cash rate at 2.5 percent was again the result that retailers were expecting. 

ARA Executive Director Russell Zimmerman said the RBA’s decision to keep the cash rate on hold for the seventh consecutive month, although somewhat disappointing for retailers, will hopefully provide the industry with the stability it needs to sustain growth over the coming year.

“Although retail seems to be showing signs of revival, unfortunately growth is not consistent and the SME sector is certainly still struggling. Interest rates must remain low to ensure that these retailers are able to cope.  

“The ARA is also concerned that with the cash rate as low as it is, banks and finance companies are starting to take advantage of this in terms of excessive charges on credit card rates. Banks need to consider Australian consumers – it is those who are least well off that must pay interest on credit cards when they need to purchase necessary products such as expensive electrical goods when they break down.

“Indicative rates from various banks show the interest charged on purchases that are not paid by the due date are between 19.59% and 20.74%.*
 
“While things seem to be looking up economically, we are aware the RBA will need to raise rates again in due course. The ARA urges the RBA to consider business owners when looking to raise rates – we are still seeing sectors of retail doing it very tough.
 
“When the RBA do raise rates they must do so slowly and exercise use the same caution as when they lowered them in 2013,” Mr Zimmerman said.

*Westpac interest on purchases -19.59%
  Westpac interest on cash out - 21.49%
 
  Commonwealth bank interest on purchases - 19.74%
  Commonwealth bank interest on cash out - 21.24%
 
  AMEX credit card interest rate on purchases - 20.74%
  AMEX credit card interest on cash out - 20.99%

Since 1903, the Australian Retailers Association (ARA) has been the peak industry body representing Australia’s $265 billion retail sector, which employs over 1.2 million people. The ARA ensures retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia.

Visit www.retail.org.au or call 1300 368 041.

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