Rate cut to boost business confidence

| November 1, 2011

The decision by the Reserve Bank of Australia (RBA) to cut interest rates by 25 basis points to 4.5 per cent on Melbourne Cup Day (1 November) will offer relief to businesses struggling in those sectors of the economy that aren’t benefitting from the mining boom.

Australian Chamber of Commerce and Industry (ACCI) economics director, Greg Evans said the rate cut would be welcomed across the board, but it would be even more warmly received by the small and medium enterprises.

“This is only a minor adjustment, but it is the single most positive thing that has happened for many small to medium enterprises in the last twelve months.

“We would expect the banks will swiftly pass on the full value of the official interest rate reduction to both business and household customers as there is no plausible justification to hold back the required adjustment.”

Evans said the 25 basis point rate cut moves policy to a neutral setting and provides a degree of insurance against the possibility that growth has faltered in second half of the year, in addition to lifting business and consumer sentiment.

What will the rate cut do for your business? Have your say below.