The 3 February 2015 interest rate cut could be good news for pharmacy, says Allfin Financial Services.
The Reserve Bank of Australia lowered the cash rate by 25 basis points to 2.25%.
“The RBA is clearly trying to stimulate business activity and household spending, in a market that has been rather sluggish,” says Mark Churchill, CEO of Allfin Financial Services.
“With the lower rate the RBA hopes to reduce the cost of consumer, housing & business credit.
“This is all good for pharmacy, and retail in general, given that they expect that the surplus cash from the consumer will now go to discretionary spending in-turn fuelling retail spending and the economy.
“It also means that rates are at record lows so business owners should be reviewing their current lending arrangements to insure they are getting the best outcome possible.
“The RBA have also hinted that they are willing to look at further cuts, as early as next month, should the underlying growth in domestic demand not continue,” Churchill says.
“The downside to all of this, as the RBA are trying to stimulate growth through reducing the cash rate, conversely an increase in the cash rate without notice may be required to keep growth and inflation under control. This may come into play as early as next year.
“The key here is to reduce debt while rates are low, knowing that as the economy improves interest rates will inevitably shift upward.”