RBA Holds Rates

Struggling consumers and retailers need the Reserve Bank of Australia (RBA) to forget about raising official interest rates this year, says leading mortgage broker Loan Market.

Loan Market Chief Operating Officer Dean Rushton said it was pleasing to see the RBA board today maintain the cash rate at 4.75 per cent.

But he said there were concerns the central bank could lift rates in the coming months in response to the resources boom, strong trade figures and rising inflation.

There’s no reason for the RBA to act this year as the four rates rises they implemented in 2010 are still having an impact through much of the economy, Mr Rushton said.

The RBA should weigh less of the decision on what’s happening in the minefields of Western Australia and pay more attention to what’s happening to retailers out there.

There have been some major business failures recently and if you walk through any suburban shopping centre you will see shops that have closed down.

Consumer sentiment remains soft and many elements of the economy, including the home finance market, continue to struggle.

The last thing they need now and in the foreseeable future is for interest rates to go up.

Any rate increase would be a serious setback to consumer confidence which is quite fragile at the moment.