According to the Australian National Retailers Association, the interest rate cut announced by the Reserve Bank yesterday was necessary to help the economy recover and regain consumer sentiment in the retail sector.

Margy Osmond, CEO of ANRA, has urged banks to pass on the entire interest rate cuts to their customers, in order to help regain consumer confidence.

“The prospect of lower interest rates gives families mortgage relief at a time when many are concerned about their job. Without falling interest rates, consumer confidence would be far worse,” she said.

Despite this many of the large banks are refusing to pass on the 0.25 per cent cut agreed by the Reserve bank.

The Commonwealth Bank is only passing on a cut of 10 basis points and the National Australia Bank has refused to pass on any of the cut.

Treasurer Wayne Swan has attacked these banks and has commented that the banks that refuse to pass on the agreed 0.25 per cent cut are threatening monetary policy.

Osmond further emphasised that the proposed rate cut was essential in the current economic climate and the conditions are currently perfect to pass it on.

“The conditions are right for an interest rate cut. Inflation is cooling and unemployment is rising. Growth forecasts for Australia and our trading partners are again being revised downwards,” Osmond said.

Despite these interest rate cuts and the two stimulus packages, Osmond still warned that the retail sector is still in for a rough ride over 2009. But overall retailers are expecting significant growth in the next four months, with the ANRA estimating a injection of $2.4 billion into the sector, as a direct result of the second stimulus package.