Friday 4 May 2012

Rate Cut is Good News

The Reserve Banks decision on Tuesday to cut interest by 50 basis points (0.50%) has been welcomed as a potential boost for retailing.
The flow through to retail spending will depend on two things. Firstly, the willingness of banks to pass on the rate cut in full. BOQ were first cab off the rank with 35 basis points, with NAB following at 32 basis points and Commonwealth at 40 basis points. The second issue is whether consumers will use the rate saving to increase spending or will they continue to pay back debt.
Either way, it is hoped that lower rates will stimulate business investment and employment which in turn will drive consumer spending.