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Retail lobby groups welcome RBA’s decision to pause interest rate hike

Both the National Retail Association (NRA) and the Australian Retailers Association (ARA) welcomed the Reserve Bank of Australia’s (RBA) decision to leave the cash rate target unchanged at 4.1 per cent.

This is the fourth consecutive time the RBA paused raising the benchmark interest rate since June this year. 

“Pausing interest rates this month will allow consumers to spend more freely during the November/December sales period and allow retailers to better assess their employment needs for this period,” said Greg Griffith, CEO at NRA, which represents 60,000 stores across Australia.

“Almost 43 per cent of small businesses aren’t breaking even, and with more Australians being pushed into financial hardship, the retail season is a make-or-break period for struggling retailers.”

The NRA hopes the RBA will start easing interest rates in the New Year so retailers can enjoy their profits from the sales period.

ARA CEO Paul Zahra said the decision to keep the interest rates unchanged will bring relief to the retail sector, as well as to homeowners and businesses.

“Christmas and the holiday season are when discretionary retailers make up to two-thirds of their profits and hence, retailers need confidence to be able to invest in jobs during this time,” said Zahra.

“The decision to pause interest rates will help bolster business confidence and again provides cautious optimism that they may have peaked.”

The RBA has increased interest rates by four percentage points since May last year as it targets to return inflation to 2-3 per cent.

The RBA forecasts CPI inflation to continue to decline to the targeted range in late FY25.

“To date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case,” said RBA governor Michele Bullock.

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