Source: EMA
The Employers and Manufacturers Association (EMA) says today’s Official Cash Rate decision will provide a small but crucial boost to business confidence.
Alan McDonald, EMA Head of Advocacy, says businesses have been grappling with severe financial pressures and the Reserve Bank’s move to cut the OCR to 5.25% may encourage many to hold on until the economy recovers.
“Increasing costs and high interest rates have impacted both consumer spending and business financing, pushing many businesses to breaking point,” says McDonald.
“Our Member AdviceLine has seen record levels of redundancy and restructuring calls, highlighting the profound effects of the previous high OCR.
“It’s encouraging that the announcement today has seen some immediate reactions from retail banks, but interest rate cuts will take some time to filter through the economy.
Inflation remains just outside the Reserve Bank’s target range of 1% to 3%, but is well below its June 2022 peak of 7.3%,” says McDonald.
“Meanwhile, unemployment has continued to rise, with the seasonally adjusted rate reaching 4.6% for the June 2024 quarter.
“Businesses are fighting for survival, and this OCR cut may be the positive signal that keeps them from throwing in the towel and halt further job losses.
“But it is only a small cut and doesn’t mean the constraints that have been weighing on the economy will disappear overnight.”
