Lower shopper turnout keeps rates steady

The reluctance of Aussie shoppers to spend big on the high street was a key factor in the Reserve Bank’s (RBA) decision to keep interest rates on hold yesterday (August 3rd), it has been claimed.

At its monthly board meeting yesterday, the RBA opted to keep the official cash rate at 4.5 per cent. The bank’s governor, Glenn Stevens, noted that households are still “displaying a degree of caution” about spending.

David Uren of the Australian has suggested that the central bank is under pressure to keep rates steady while consumers continue to lack confidence.

He pointed to official data which shows retail sales grew by only 0.2 per cent in May, with the annual growth rate of 1.9 per cent far below the long-term average of close to six per cent.

In addition, department stores saw the volume of goods sold fall by 1.4 per cent in the June quarter, he observed.

Dwindling shopper confidence has prompted more Aussies to compare debit cards in search of safer spending tools. Last week, Lesley Parker, a finance columnist for the Sydney Morning Herald, suggested that Australian consumers may find themselves increasingly using their smartphones as payment tools over the coming years.

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