Following his diatribe yesterday, wrongly blaming the former Labor Government for the retail sector’s woes, retail mogul Solomon Lew has dished-up more self-interest, calling on the Reserve Bank of Australia to slash interest rates by another 0.5% in the lead-up to Christmas. From the Australian:
RETAIL magnate Solomon Lew wants an urgent, 50-basis-point cut in official interest rates before Christmas, as Premier Retail chief executive Mark McInness said the economy was in the “cardiac arrest ward”…
“The economy is in the cardiac arrest ward and it needs to be kick-started,” Mr McInness told The Australian.
“The Reserve Bank needs to lower rates again to stimulate consumer sentiment and buffer five years of poor management and legislation by the previous government.
“Mr Lew said the economy was in “serious decline”, with 80,000 retail jobs lost in the five years, and the business community needed a break if it were to lift its level of investment and start generating jobs growth.
He called for shock treatment through a one-hit, 50-basis-point cut in the cash rate to 2 per cent at next month’s RBA board meeting — and if not then, certainly by Christmas.
When will these guys get it through their heads: the growth in retail sales experienced in the decade or so leading-up to the Global Financial Crisis was an aberation, brought about by the monumental lift in household debt and the running down of savings:
Supported by the huge surge in national disposable income following the once-in-a-century commodity price boom:
Neither of these events were sustainable, and the more recent slowing of retail sales growth was inevitable, and certainly not caused by the former Labor Government.
Expecting retail sales growth to return to the boom time levels of yesteryear, on the back of rising household leverage from artificially low interest rates, is both delusional and undesirable.
It’s time the captains of retail adjusted to the “new normal”, slower growth environment.
