Prealene Khera
While local business owners have welcomed the Reserve Bank of Australia’s recent interest rate cut, they say without further slashes, consumer confidence will remain stunted.
The RBA announced a rate cut on Tuesday, February 18, reducing the official cash rate by 0.25 per cent, bringing it down to 4.1 per cent from 4.35 per cent—the first cut since November 2020.
The cut could offer some respite for companies and mortgage holders feeling the pinch but more needs to be done before people can truly enjoy shopping, according to Sunshine Business Association president Vu Du.
While pleased by the RBA’s announcement, Mr Du hopes it is the first in a long line of cuts.
“I just don’t think one rate cut is going to be enough to keep anyone happy,” he said.
“I believe there should be more cuts before consumer confidence rises.”
Operations manager for IGA Delahey, Jay Morgan, reiterated Mr Du’s sentiments.
“It’s a great start by the RBA to cut it, but we also understand that this is not the end of the 0.25 per cent cuts,” he said.
“More work will need to be done for people to be able to pay their home loans. Once they can do that, then we will see more people truly enjoying their shopping.”
Mr Morgan noted that the high interest rates in the past have significantly impacted shopping patterns, with consumers making fewer big purchases.
“Interest rate decision time always leaves us uncertain because of what we’ve had to go through as businesses in the last few years,” he said.
“We’ve noticed people would previously shop a couple of times a week with big purchases—buying all their groceries at once.
“People are now shopping four or five times a week as a norm with smaller purchases, and we’re seeing that they’re shopping at multiple retailers where they can get the best price and value for money.”
– with Gladys Beretta
