The Temple & Webster Group Ltd (ASX: TPW) share price had a tough day today.
The company's share price dropped 10.42% to $3.87. For perspective, the S&P/ASX 200 Index (ASX: XJO) fell 1.53% today.
So what impacted the Temple & Webster share price today?
RBA rate decision
The Temple & Webster share price finished the day well in the red, but it was not the only ASX retail share to drop.
The JB Hi-Fi Limited (ASX: JBH) share price slipped 3.45% today, while Harvey Norman Holdings Limited (ASX: HVN) shares fell 1.16% and the Nick Scali Limited (ASX: NCK) share price dropped 1.85%.
Temple & Webster shares fell in the lead up to and following the Reserve Bank of Australia (RBA) lifting interest rates this afternoon.
The RBA lifted the benchmark interest rate by 0.5 percentage points today to curb inflation, as my Foolish colleague Bernd reported. The cash rate now sits at 0.85%.
A rate hike was widely predicted. Goldman Sachs predicted the 0.50% jump, while other analysts predicted more modest increases of between 0.25 and 0.4%.
Interest rate rises can impact retail shares due to rising costs and consumers having less spare cash to spend on retail including furniture and homewares.
Reserve Bank Governor Philip Lowe said: "Inflation in Australia has increased significantly. While inflation is lower than in most other advanced economies, it is higher than earlier expected."
City Index senior market analyst Matt Simpson said the rate hike was the first 50 basis point (bps) rise since February 2000. He added:
That's also 75-bps over the past two meetings, which makes it their most aggressive back to back meeting on record.
I really think the RBA have restored some credibility today by coming out swinging.
Multiple brokers have recently rated the Temple & Webster share price as a buy, including Credit Suisse, UBS, and Morgan Stanley.
In a recent update, the company launched a new online business named The Build with 20,000 products in 39 categories.
Temple & Webster share price snapshot
The Temple & Webster share price has fallen 64% in the past year, and by a similar amount in the year to date. It's also down 12% over the past month and 17% in a week.
For perspective, the S&P/ASX 200 Index (ASX: XJO) has lost nearly 3% in the past year.
