Property owners breathed a sigh of relief earlier this month when the Reserve Bank left the official cash rate on hold at 4.75 per cent – the level it has been at since November.
Aussie Founder and Executive Chairman John Symond said the RBA is treading a very cautious path as it tries to find a balance between the booming mining sector and the ailing retailers.
“The Reserve Bank is very concerned about the consumer psyche at the moment,” he said. “They are saving more than they have in 20 years, they’re spending less so retail is down.”
Mr Symond said while mining is “going gangbusters”, retail struggles as consumers save their money or take advantage of the strong Aussie dollar to buy offshore.
“If you talk to retail, whether that is the corner store or Gerry Harvey (of Harvey Norman), they’re very concerned that if consumers stop spending for too long, it will then impact the economy,” he said.
“(The RBA) sees spending is way down and short-term that is a good thing, but they have expressed concern that if Australians keep their hands in their pocket that could cause the economy to slow down at a faster rate than what is needed.
Mr Symond said the good news to come out of the RBA’s March Board Meeting is the fact it has signalled that interest rates may stay on hold for some months to come.