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Australia’s Retail Sales Take a Dive as RBA Keeps Interest Rates at Historically Low Levels

Australian retail sales for the month of December declined by 4.4%. This is the first time that retail sales have fallen after rising for three months in a row. In almost all regions of Australia (except the Northern Territory) sales have fallen.

The Australian Bureau of Statistics (ABS) announced that retail sales decreased 4.4% to $319 billion ($2.25 billion) in December, following a 7.3% increase in November.

The 4.4% fall is the largest monthly fall since April 2020. However, retail sales remain elevated compared to pre-pandemic levels, with December’s monthly turnover the second-highest level in the series following last month’s record, according to Ben James, Director of Quarterly Economy Wide Statistics

The Reserve Bank of Australia (RBA) left its key interest rate unchanged at 0.1% at today’s meeting, the lowest level on record. In addition, there was no announcement on the ending of the bond-buying program.

The RBA statement said the RBA Board of Directors remains committed to accommodative monetary policy to support the economy to return to its full employment goals.

Even if the bond-buying program were to end, however, this does not mean that the RBA plans to raise interest rates any time soon. The key interest rate will only be raised once the inflation rate has returned to the target range of 2% to 3%.

In addition, the RBA said that while inflation numbers have rebounded in the past, it is too early to draw a conclusion.

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