THE Reserve Bank of Australia this week announced a cut in the cash rate target to 0.1%, part of an effort to contribute to economic recovery from global pandemic.
In a statement, governor Philip Lowe said the board decided on a package of measures to support job creation and the recovery of the Australian economy.
“With Australia facing a period of high unemployment, the Reserve Bank is committed to doing what it can to support the creation of jobs,” Mr Lowe said.
“Encouragingly, the recent economic data have been a bit better than expected and the near-term outlook is better than it was three months ago,” he said.
“Even so, the recovery is still expected to be bumpy and drawn out and the outlook remains dependent on successful containment of the virus.”
See Mr Lowe speak here.
Other measures included:
- a reduction in the target for the yield on the three-year Australian government bond to around 0.1%;
- a reduction in the interest rate on new drawings under the term funding facility to 0.1%;
- a reduction in the interest rate on Exchange Settlement balances to zero;
- the purchase of $100bn of government bonds of maturities of around five to 10 years over the next six months.
The board also considered an “updated set of economic forecasts”.
“The global economy has been recovering from the initial virus outbreaks, with the recovery most advanced in China,” an RBA statement read.
“Even so, output in most countries remains well short of pre-pandemic levels.”
According to the RBA, in Australia, the economic recovery is under way and positive GDP growth is now expected in the September quarter, despite the restrictions in Victoria.