Check in on the news that matters most for small business owners as we unwrap today’s headlines. Here’s the news you need to know on Wednesday, September 4. 2019.
Interest rates hold as Australia races to 0
Following the Reserve Bank of Australia’s board meeting yesterday, Australia’s official interest rates remain on hold at 1 per cent. This month’s announcement by the RBA to hold steady followed two consecutive months of rate cuts which had left economists pondering a possible recession.
The RBA’s decision to keep rates the same, despite a softening economy suggest rates will remain low for some time. The move comes ahead of the release of the June quarter growth domestic product figures, which are expected to show the economy is the weakest it has been in almost 20 years.
Reserve Bank governor Phillip Lowe has now revised domestic growth figures from those previously predicted.
“Economic growth in Australia over the first half of this year has been lower than earlier expected, with household consumption weighed down by a protracted period of low-income growth and declining housing prices and turnover,” Lowe said in a statement.
Account surplus takes us back to the 70s heydays
It’s not all doom and gloom on the finance front. Strong iron ore and coal exports have assisted in delivering the nation’s first current account surplus since 1976. This historic result turned the current account from a deficit of $2.9 billion in the March quarter to a surplus of $5.8 billion, delivering an almost 7 billion turnaround.
AMP Capital’s Shane Oliver heralded the turnaround as great news for Australian trade, telling the AFR:
“It all means that Australia is becoming far less dependent on foreign capital.”
New player enters buy-now-pay-later market
The popular consumer buy-now-pay-later industry may be in for a shake up as new player Latitude Financial enters the market. CEO Ahmed Fahour, says LatitudePay will differ from existing players such as Afterpay as they will credit check customers before approving them to use the service.
LatitudePay’s offering will allow consumers to divide purchase costs into 10 equal interest free payments and Fahour says purchases under $250 will come at no service charge to retailers until January 2021.
Latitude has partnered with major retailer Harvey Norman for the launch of the service. Fahour told the Sydney Morning Herald, Latitude (formerly GE Finance) has been offering no interest instalment payments for decades – but LatitudePay would allow them to extend the offering to smaller transactions.
Fahour warns existing instalment plan offers are set to unravel due to a lack of credit checks by providers.