ACCI urges banks pass on full interest rate cut

The Australian Chamber is urging banks to pass on today’s interest rate cuts in full in order to boost consumer spending, encourage businesses to invest and create jobs and reinforce the economy’s capacity to withstand global turbulence.

“To ensure the greatest benefit is gained from the cut in the cash rate, we urge lenders to pass on the interest rate cut in full,” ACCI chief executive James Pearson said.

Mr Pearson said it was the right time for the Reserve Bank Board to lower the cash rate to 0.75%.

“Although we are still to see the full impact of the earlier reductions in the cash rate and personal tax cuts, we believe the timing is right to boost parts of the economy that continue to struggle,” Mr Pearson said.

“With slowing economic growth and lower consumer confidence, small businesses have been doing it tough over the past year. This has particularly affected discretionary spending in small retail businesses, including cafes and restaurants.”

“Weakness in the housing sector has also been a significant drag on the economy over the past year, which has flowed through to consumer confidence and household spending.”

“However, there are signs the housing sector has turned the corner recently, with a modest improvement in Sydney and Melbourne house prices. The lower interest rates will help the housing sector to rebuild momentum.”

“The benefits of this will flow through to household spending, which should provide further impetus.”

Global uncertainty driven by the US-China trade and technology dispute, Brexit, protests in Hong Kong, and tensions in the Middle East continued to represent risk.

“It is important the Government closely monitor these developments and look to ways to further strengthen the economy and ensure Australia is well placed to respond to any global storms ahead,” Mr Pearson said.