12:00a.m. 2nd September 2008

| By Damian Bathersby

Sunshine Coast business operators are optimistic any cut in the official interest rate today will go some way towards restoring consumer confidence.

After a string of rate rises which have added hundreds of dollars to home loan repayments, many consumers have become understandably cautious about spending.

If the banks pass on the 0.25% rate cut which the Reserve Bank is tipped to deliver this morning, it will be as much about providing a light at the end of the tunnel as the $35-$40 it will put back into the pocket of the average homebuyer each month.

Sue Willis, president of the Sunshine Coast Business Women’s Network, said whenever members got together recently, talk turned to falling consumer confidence.

“People are being very careful about where they are spending their money and how much they spend,” she said.

“But there is also confidence that with an interest rate drop it can turn quickly – we don’t think it will last for long.

Rising interest rates had been a double-edged sword for business owners, who had to cope with nervous consumers on top of their own mortgages and business loans being affected.

“I think most small business is in the same position,” she said.

“An interest rate cut certainly won’t hurt and will give some strength to the feeling we’ve all got that this won’t last for too long.

“Fuel prices have stabilised to some extent recently and the general feeling is that an interest rate drop will put us on the path to getting consumer confidence back.”

Brian Deasy, owner of Deasy’s electrical store in Maroochydore, said the most recent interest rate rises had affected business and a drop would be welcome.

“I think it will give a bit of comfort to consumers and take away some of the uncertainty,” he said.

“People will become more willing to consider a purchase whereas they might have deferred it before.”

Sales of kitchen appliances and furniture were the areas most affected by falling consumer confidence but the effect of an interest rate cut would be felt almost immediately, with a noticeable rise in people through the shop within days, he said.

Treasurer Wayne Swan has been talking tough with the banks, telling them that they had an obligation to pass on any rate cut from the RBA.

“If the Reserve Bank cuts rates there’ll be absolutely no excuse by any lender for not cutting rates. None at all,” he said