Industry groups say RBA acting too slow

Retail and housing industry groups have questioned the central bank's decision to leave the official cash rate unchanged at its first board meeting of the year.

The Reserve Bank of Australia (RBA) kept the cash rate at three per cent, saying this was prudent after the substantial easing in monetary policy over the past year.

RBA government Glenn Stevens said with inflation consistent with its target and growth likely to be a little below trend over the coming year, an accommodative stance of monetary policy was appropriate.

"The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand," he said in a statement.

Housing Industry Association chief economist Harley Dale said evidence of a sizeable and sustainable new home building recovery remained far from compelling.

"Under these circumstances the RBA needs to be willing to act quickly to take interest rates lower," Dr Dale said in a statement.

The managing director of the 1300HomeLoan network, John Kolenda, was more blunt.

"The RBA haven't got much right in recent years, and this decision at their first meeting of 2013 to leave rates on hold is yet another blunder," Mr Kolenda said.

He said the economy was going nowhere, and the RBA's decision had failed most consumers and struggling sectors of the economy.

Loan Market corporate spokesman Paul Smith said with the cost-of-funds pressures easing for many lenders there was an opportunity for banks to make adjustments to their variable rates to attract new customers.

Retailers expect a slow start to 2013 given the RBA's determination to keep the cash rate stable.

"Despite some weak inflation, suggesting there is room to cut, the RBA has chosen to adopt a `wait-and-see' approach," Australian National Retailers Association chief executive Margy Osmond said.

"Retailers don't need to be so cautious. They know what they will see."

However, National Retail Association chief executive Trevor Evans endorsed the central bank's inaction, saying it needed room to move should economic conditions deteriorate.

"The RBA has left itself room to, should it be confronted with a further collapse in consumer sentiment later in the year," Mr Evans said.

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9291-0.0074-0.78%
    AUDUSD=X
    0.5536-0.003-0.53%
    AUDGBP=X
    0.6724-0.006-0.88%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg