Steady rates frustrate business groups HOUSING and retail groups are frustrated the central bank has again passed on cutting the cash rate when non-mining sectors of the economy are in desperate need of a boost. The Reserve Bank of Australia (RBA) kept the cash rate at an all-time low of 2.75 per cent for a second month at its monthly board meeting on Tuesday,http://www.bugsbunnys8s.biz/, although it kept the door open for a reduction if needed given a benign inflation. "(The board) decided that the stance of monetary policy remained appropriate for the time being," RBA governor Glenn Stevens says in a brief statement. But Australian Retailers Association executive director Russell Zimmerman said the rate reduction in May was simply not enough to help retailers faced with consumers who remain reluctant to spend.
"This frustrating rate stay,http://www.phoenixsun8s.biz/, together with higher operational costs and recent increases to the minimum wage, superannuation levy and penalty rates, means we can only expect further damage to retailers who are struggling to keep their heads above water," Mr Zimmerman said in a statement. Australian National Retailers Association chief executive Margy Osmond said there is still uncertainty among consumers ahead of the federal election. "With an election date still to be announced,http://www.playoffs12s.biz/, we're concerned about the impact this might have on consumer spending and would encourage the board of the Reserve Bank of Australia to consider the impact this might have on the sector," she said in a statement. The Housing Industry Association said the RBA's failure to move would merely prolong the weakness in residential construction.
"Our economy needs a strong residential building sector to substitute for declining construction activity in the mining sector," the association's senior economist Shane Garrett said. Loan Market director Mark De Martino agreed uncertainty about who is likely to win the election is creating uncertainty about where the economy is heading. "Most lenders are anticipating further rate reductions, evidenced by their continued aggressive moves in fixed interest (loan) rates,http://www.jordangrapes5s.biz/," he said. John Kolenda, managing director of another mortgage provider,http://www.squadronblues13s.biz/, 1300HomeLoan, said the RBA's last rate cut in May provided a small economic boost.
"But things have got worse since then with the weakness in the Chinese economy and Europe in particular," Mr Kolenda said. "If we don't get a strong rise in building approvals soon and a pick-up in retail spending, the Australian economy is looking at anaemic growth and rising unemployment."
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