'Rate cut might not be enough'
A CUT in official interest rates by the Reserve Bank tomorrow will make Melbourne Cup day all that more exciting for Australia's biggest retailers, but before they reach for the champagne they will look for more positive economic news to shake consumers from their frugal behaviour.
Last year the retail sector's Spring Racing carnival was ruined by a rate rise, which with the growing financial crisis in Europe, created a maelstrom of bad news that sent shoppers fleeing, spoiling the crucial Christmas trading period.
It could be different this Melbourne Cup. Soft quarterly inflation numbers last week gave the RBA room to cut rates tomorrow, possibly from 4.75 per cent to 4.5 per cent - as markets are pricing and 12 of 20 economists are calling for.
However, while the leading retail bosses said they would welcome an interest rate fall it probably would not be enough to resuscitate consumer confidence levels that remain stuck at recession-like lows.
''No doubt it's a help; whether it's a panacea is too early to call,'' Stephen Roche, chief executive of Australian Pharmaceutical Industries, the owner of health and beauty retailer Priceline, said.