An interest rate cut will provide welcome relief for Australian households and businesses dealing with cost-of-living pressures, according to the Business Council.
Business Council of Australia Chief Executive Bran Black said the Reserve Bank's decision to cut the cash rate by 25 basis points to 4.1 per cent was a welcome first step in easing financial pressures.
"Tuesday's interest rate decision will be welcome relief for Australian households and businesses battling cost pressures," Mr Black said.
"While many households will now welcome a reduction in their mortgage payments, more work is needed to ensure we continue to see pressures taken off the economy, including by bringing public spending onto a sustainable path."
Mr Black also highlighted that an interest rate cut does not address Australia's sluggish productivity growth and the ongoing need for an economic agenda that prioritises increasing our global competitiveness.
"If we want to supercharge our economy then we need to look at how our regulatory settings are putting the handbrake on much needed investment," Mr Black said.
"Australia must become a more competitive place in which to do business if we want to be a leading economy of the future."
BCA chief economist Stephen Walters said the rate decision today probably was a closer call than market pricing had implied and although the Bank was cautious, they had more confidence that inflation was moving sustainably towards the target range.
"The RBA's statement indicates that the labour market has tightened and that the forecast for core inflation has been lifted, and although they say inflation appears to have eased, the Bank stated there are risks on both sides."
Both the BCA's recent Big Five Questions election platform and Pre-Budget submission call for greater fiscal restraint to alleviate inflationary pressures and for policies that unlock economic growth.
