Retailers are saluting the Reserve Bank of Australia’s decision to keep the cash rate stable, as the early part of 2011 continues the ‘challenging’ theme of 2010 for the sector.

Australian National Retailers Association chief executive Margy Osmond said “The Interest rate jump on Melbourne Cup day certainly sent aftershocks through the retail community, particularly in the lead up to Christmas.

Retail sales figures for December will be out next week, which will tell us how much of an impact November’s rate rise had,” she said.

“Retailers are anticipating that the early part of 2011 will be a reflection of 2010, with additional challenges in terms of flood damage to stores in Queensland and Victoria, alongside extra transport and clean up costs and rising utility prices.

“However, it is still a buyer’s market for consumers and prices will remain as competitive as possible in order to keep shoppers coming through the doors and product moving off the shelves,” Mrs Osmond said.

Retail Sales figures for December will be published by the Australian Bureau of Statistics on Monday, 7 February

The Reserve Bank today announced official interest rate will remain steady at 4.75 per cent for another month.

Mortgage Choice spokesperson Kristy Sheppard said, “This result is a blessing for those who are still adjusting to a new household budget after the November rate rise and ‘silly season’ spending. It will please all borrowers who are repaying debt at a variable interest rate.”

“Lender interest rates are now above what the Reserve Bank sees as ‘neutral’ so it would need a good reason to raise the cash rate again so soon. Despite low unemployment and an imminent resources boom, there’s not yet enough reason to put further pressure on consumer and business consumption, especially given the unknown inflationary effect of recent flooding.

”However, economists are saying it still looks likely we’ll see at least one or two rate rises this year, so borrowers should prepare now by adding a little more to each mortgage repayment. If we don’t see any rate rises that’s terrific - they’ve given their mortgage some leg room while reducing the loan term and interest owed.