Retailers frustrated by steady cash rate

Retailers have criticised the Reserve Bank's decision to leave interest rates on hold. Source: AAP

THE decision to leave interest rates on hold will cause further damage to the struggling retail sector, a peak retailers group says.

The Reserve Bank of Australia (RBA) announced on Tuesday the cash rate would remain at 2.75 per cent following its monthly board meeting.

Russell Zimmerman, executive director of the Australian Retailers Association, says the decision is frustrating for the industry.

"We can only expect further damage to retailers who are struggling to keep their heads above water," Mr Zimmerman said.

He said a rate cut was needed in order to encourage customers to spend their money.

"The RBA needs to cut official rates to 2.5 per cent to get variable mortgage rates to a level of six per cent," he added.

Australian National Retailer's Association CEO Margy Osmond agreed that the steady cash rate would fail to boost retail spirits.

She said the retail sector could not rely on the recent weakening of the Australian dollar to boost domestic spending.

"We expect customers to remain cautious about their discretionary spending ... as we enter the second half of the year," she added.

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