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Australian Central Bank Cuts Rate To Record Low

Australian Retailers Association executive director Russell Zimmerman said the central bank was stepping in to "save the furniture" amid a lack of economic leadership.

"The RBA have provided some relief to Australian retailers, although it is concerning that this cut has come on the back of flat retail sales, predictions of rising unemployment and falling consumer and business confidence," he said in a statement.

The Australian Chamber of Commerce and Industry welcomed the rate cut as providing much-needed relief for struggling businesses.

But the government could not rely on the central bank alone to bolster the economy as it adjusts to the end of the mining boom, the chamber's chief executive Peter Anderson said.

"Clearly other areas of economic management are falling well short of the mark and dragging on confidence," Anderson said in a statement.

"That includes not delivering on budget undertakings, poorly targeted spending, and a series of tax increases," he said.

The conservative opposition seized on the rate cut as an indictment of the economic management of the center-left Labor Party government, which has forecast deepening deficits due to dwindling company tax revenue. Labor has ruled since 2007 and hopes for a third three-year term at elections on Sept. 7.

Opposition treasury spokesman Joe Hockey said interest rates were now even lower than during the global recession in 2009 when Prime Minister Kevin Rudd described a 3 percent central bank rate as an "emergency level."

"The Reserve Bank has cut interest rates to record low levels because the economy is struggling under Kevin Rudd," Hockey told reporters.

"Business and consumer confidence in the United States is in better shape than business and consumer confidence in Australia and one of the key reasons for this is that Australians are worried about their jobs," he said.

The government has defended it economic credentials, boasting the Australia is one of only eight countries with a triple-A credit rating from all three major ratings agencies. Australian government debt remains low compared with most Western countries.

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