Peak business body, the NSW Business Chamber, is disappointed that the Reserve Bank of Australia has left interest rates on hold at 4.25 per cent for the third month in a row.
The RBA has not change interest rates since November and December of 2011 when it shaved off 0.25 per cent consecutively at the two monthly meetings.
RBA Governor, Glenn Stevens, justified the decision on the basis that current economic data suggests the world economy is not heading for a deep downturn and domestic demand is at its highest levels in four years.
Despite this, the NSW Business Chamber said that small businesses are in desperate need of an interest rate cut.
“I’m very disappointed that the RBA has chosen not to be a friend to the many small business owners in western Sydney that are being squeezed by a subdued economy and a Federal Government whose solution is to introduce new taxes,” said Geoff Starr, North West Region NSW Business Chamber Area Manager.
“We are less than 100 days away from the start of the world’s biggest Carbon Tax that will inflict even greater economic pain on Australian businesses but with no sign of relief or assistance from the RBA or the Government.”
Mr Starr added that it is particularly risky that institutions like the RBA let the apparent strong health of the mining sector overshadow other sectors that are struggling.
Mr Starr said the case for an interest rate cut will be even stronger when the RBA meets in May.
“It’s unfortunate that small business owners will have to go another month without interest rate relief until the RBA finally makes the right call next month,” he said.
ANZ will announce today if they decide to move their rates despite the RBA’s decision.
“ANZ Bank has become the de facto price setter for the mortgage industry as we believe that most lenders will wait until after ANZ reviews rates on Friday, April 13 before deciding whether to move their own rates,” said Weekender business finance columnist, Damien Smith.
“What this means is that we now need to know both the RBA’s decision and the ANZ’s decision before seeing what the rest of the market will do.”