Business welcomes sensible rates decision

7 December 2010

The State’s leading business membership organisation, Business SA, responded to today’s decision by the Reserve Bank Board to maintain official interest rates at 4.75 per cent.

Business SA Chief Executive Officer, Peter Vaughan, said that it was very important to keep interest rates on hold in December.

“It was essential that the Reserve Bank made the sensible decision to keep interest rates on hold this month,” Mr Vaughan said.

“Last month’s premature interest rate rise is still flowing through the economy and its effect will be felt right up until Christmas.

“Businesses were looking forward to a busy Christmas trading period, however last week’s retail trade data confirms the low business and consumer confidence throughout the State.

“Last month’s rate rise will keep a significant amount of spending money in people’s pockets and the Reserve Bank must now leave rates on hold until well into the New Year.

“Implementing interest rate rises to simply cool off the eastern states has a major impact on the many small businesses across South Australia.

“It is a double blow to the business community over this year’s Christmas trading period, with low consumer confidence and very restrictive shop trading hours.

“The Reserve Bank will be well aware that any rate rises will increase the pressure on households and businesses, particularly given the significant rate increases the major banks passed on in November.”