Rate cut 'would boost the retail sector ahead of Christmas'

A reduction in interest rates by the Reserve Bank of Australia (RBA) will encourage shoppers to spend more with their credit and debit cards over the Christmas period, it has been claimed.

John Symond, executive chairman of Aussie Home Loans, said the time is right for the central bank to make its first change to the cash rate this year, reports the Australian Associated Press.

The last time it opted to make an alteration was in November 2010 when it announced a 25 basis point increase, taking it up to the current level of 4.75 per cent.

"We are heading into the crucial Christmas retail season and a rate drop will boost sales and the rest of the economy," he said in a statement.

The expert noted that the country is still in the process of recovering from the global financial crisis but said "economic shocks" could still have an impact.

This comes after deputy governor at the RBA Ric Battellino said household spending has started to return to more "sustainable" levels.

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