Soft retail figures may pressure RBA
(22 March 2010 – Australia) Flat Australian retail sales over the month of February could be cause enough for the Reserve Bank of Australia to leave interest rates steady in April, according to the CBA.
Research conducted by the bank, tracking the value of credit and debit card transactions processed through Commonwealth Bank point-of-sale terminals, rose by 0.1 percent, in trend terms, over the month of February, after a flat result in January. When compared to a year earlier, retail sales are up by 4.4 percent.
According to executive general manager of Local Business Banking at the Commonwealth Bank, Symon Brewis-Weston, the soft retail figures suggest consumers are still cautious, which puts further pressure on the Reserve Bank of Australia to leave interest rates unchanged in April.
The latest data suggests that consumers and business owners are still playing it safe when it comes to spending as the effects of rising interest rates take their toll. Given that more rises are expected, the bank anticipates seeing a slide in retail sales over coming months, Mr Brewis-Weston added.
Craig James, chief economist of the bank's broking subsidiary CommSec and author of the research, said although levels of consumer and business confidence are a lot higher than they were a year ago, this doesn't seem to be translating into improved retail conditions which suggest rates may not rise next month.
The Commonwealth Bank is predicting the Reserve Bank will keep interest rates on hold in April. This move would be supported by the research, which only shows a slight uplift in sales, but nothing to get excited about. Until there is a marked improvement in consumer spending, the Reserve Bank would be wise to tread very carefully when it makes its next interest rate decision in April, Mr James added.
According to executive general manager of Local Business Banking at the Commonwealth Bank, Symon Brewis-Weston, the soft retail figures suggest consumers are still cautious, which puts further pressure on the Reserve Bank of Australia to leave interest rates unchanged in April.
The latest data suggests that consumers and business owners are still playing it safe when it comes to spending as the effects of rising interest rates take their toll. Given that more rises are expected, the bank anticipates seeing a slide in retail sales over coming months, Mr Brewis-Weston added.
Craig James, chief economist of the bank's broking subsidiary CommSec and author of the research, said although levels of consumer and business confidence are a lot higher than they were a year ago, this doesn't seem to be translating into improved retail conditions which suggest rates may not rise next month.
The Commonwealth Bank is predicting the Reserve Bank will keep interest rates on hold in April. This move would be supported by the research, which only shows a slight uplift in sales, but nothing to get excited about. Until there is a marked improvement in consumer spending, the Reserve Bank would be wise to tread very carefully when it makes its next interest rate decision in April, Mr James added.
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