After toughing it out through a year-long stretch of higher-than-average interest rates, business owners applauded November’s decision by the Reserve Bank to drop the cash rate by a quarter of a percent.
This second drop in Australia’s official interest rate, just 19 days out from Christmas, is sure to bring even more joy to the engine room of our economy – SMEs.
And rightly so. The lead up to Santa arriving was looking fairly dismal for many, with consumer conservatism echoing through retail stores, manufacturing operations and a range of other businesses.
Too many have had to drop back staff hours or numbers and slash costs in areas where there was little room to move. While conditions have been tough, what has been inspiring is to see some business owners holding their heads high and implementing new strategies to keep their heads above water. All while continuing to look to a healthy future.
Back to today’s decision. December is usually the time of year when business owners are knee-deep in building their plans for the following year; primarily whether they plan for growth or strive to simply maintain the status quo.
The RBA announcement is one big tick in the right direction, while lenders’ reaction to it is really the ultimate check box.
Big banks and other lending institutions following suit with applying the full rate cut to business and home loans will go some way to determining the direction Aussie businesses take in 2012 and the appetite of consumers to spend up during the silly season.
Let’s hope the post-GFC ‘cautious consumer’ mindset relaxes in the light of Australia’s second cash rate cut for the year, so SMEs can also have a more positive festive season.