The Reserve Bank of Australia (RBA) has made the decision to pause interest rates at 4.1 per cent, after moving four percentage points since May last year.
A statement by Philip Lowe, Governor of the RBA, said that the higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so.
“In light of this and the uncertainty surrounding the economic outlook, the Board decided to hold interest rates steady this month. This will provide some time to assess the impact of the increase in interest rates to date and the economic outlook.”
The decision was welcomed by Greg Griffiths, CEO of the National Retail Association (NRA), who said that the Australian Bureau of Statistics (ABS) data shows that Mother’s Day spending in May gave retailers some relief as promotional sales encouraged consumers to spend on florists and cosmetic retailers.
“The pause in interest rates immediately follows the wage and superannuation guarantee increases that kicked in last Saturday (1 July).
“We predict the payroll increase of 5.75 per cent could force smaller retailers to shed labour costs, but the rates reprieve might give them time to find creative solutions to deal with increasing business costs.”
Griffith said the resilience of the Australian retail sector speaks for itself, and they urge businesses to do what they can to boost morale and offer their customers experiences that inspire loyalty even through the inflation storm.
“We ask the RBA to stay their hand for another couple of months so businesses can find their bearings before dealing with another rate increase.
“Retailers have faced several blows and while the rates pause is a step in the right direction, we urge the Government to turn its attention to businesses that are struggling to stay afloat.”