Earlier this week (May 7) the Reserve Bank of Australia (RBA) made the decision to reduce the official cash rate by 25 basis points, bringing it down to 2.75 per cent.

This is the first time this year that the RBA has decided to cut the cash rate after leaving it unchanged at three per cent flat.

The new rate will help to increase household affordability for many Australians across the country, and give them the confidence that they need to take control of their finances.

Extra cash saved from expenses will help people to increase how much they have available for household budgets

Commenting on the RBA’s decision, governor Glenn Stevens stated that it was made in order to help stimulate positive and sustainable economic growth in the country.

“There has been a strengthening in consumption and a modest firming in dwelling investment, and prospects are for some increase in business investment outside the resources sector over the next year,” said Mr Stevens.

The cash rate will also aid in keeping inflation contained and on track to reaching targets set by the RBA.

The Australian National Retailers Association (ANRA) has welcomed the RBA’s decision, with chief executive Margy Osmond stating that it will help to get spending on retailing in Australia back to good levels.

“After a great start to the year, retail suffered a 0.4 per cent downturn in March, despite purchasing volumes going up, prices are going down faster and margins are squeezed ever tighter,” said Ms Osmond.

“The sector is doing what it can to get Aussies back to shopping, prices are down and there’s not much room for them to drop further. With the RBA now playing its part consumers may now feel secure enough to spend and business can recover.”