By TraderVox.com
Tradervox (Dublin) – A Deloitte Access Economics report released today indicated that the interest rate cut done by the Reserve Bank of Australia in the last eight months may be yielding fruits as it may boost consumer confidence. In the report, the company said that retail “gloom” may be receding after the 1.25 percent interest rate cut done in duration of 8 months.
The report also went ahead to explain that the interest rate cuts will provide substantial chunk of disposable income hence increasing consumer spending power which is good for the growing economy. The retail industry has been one of the worst hit by the current resource boom in the country and spending measure taken by the government including the payment for school-age children and welfare spending will provide “sugar hit” to the industry according to the report.
In a separate survey by Westpac Banking Corp, consumer confidence is dwindling while prices are declining with Myer Holding ltd, one of the nation’s largest department store, forecasting a 15 percent decline in income this year. The survey showed that households in Australia are saving more than two times their US counterparts. According to Deloitte, lower interest rate will go a long way in changing this scenario as households will have more to spend.
According to Deloitte report, the interest-rate cuts and the budget handouts will abet the retail sector giving it some upward momentum in the future. The report further showed that the real wages growth has picked up and it is expected to sustain growth in the retail sector.
Despite these positive remarks from Deloitte, the Australian currency dropped against the US counterpart as investors sought safe haven assets as Greece nears the voting day. The Aussie dropped by 0.3 percent to trade at 99.34 US cents and also dropped by the same margin against the yen to exchange at 78.96 yen.
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