Rate cuts 'could boost consumer confidence'

Australians may stop focusing on their savings accounts and start spending thanks to the latest rate cuts from the Reserve Bank of Australia (RBA), it has been claimed.

Grant O'Brien, the chief executive of Woolworths, told the Australian that the RBA is hoping to spur demand in the household sector in order to boost fluidity in the Australian economy and encourage growth across the country.

"The deleveraging and savings means there are funds available; it is just a question of providing some sparks, giving some confidence to consumers to spend," said Mr O'Brien.

He noted that the global financial crisis has encouraged Australians to be cautious with their cash, keeping it for a rainy day in case the debt problems facing Europe and the US spread to Australia.

The Commonwealth Bank of Australia's latest business sales indicator suggested that a drop-off in consumer spending is having a negative effect on businesses.ADNFCR-1761-ID-801459723-ADNFCR