The major retraction in the economy during the March quarter should send a loud message to the RBA to keep the cash rate on hold, Loan Market Group's chief operating officer Dean Rushton has said.
According to Mr Rushton, the 1.2 per cent fall in the GDP for the March quarter should persuade the RBA of the far reaching negative impacts a rate rise would have.
“The fact is, the Australian economy has had its largest decline in two decades and we’ve seen housing aprovals hit 10 year lows. There’s a recovery period this country needs," he said.
“It’s been no secret; cost of living increases have dominated headlines in 2011. The confidence of the Australian consumer is clearly waning.”
Australian Bureau of Statistics data revealed retail sales unexpectedly fell 0.5 per cent in March, the first drop in five months.
“There are many positives for consumers, both wages and employment are at healthy levels, but it seems that external economic issues are overriding their willingness to spend,” Mr Rushton said.