Home / World News / RBA leaves cash rate at zero.25computer

RBA leaves cash rate at zero.25computer

Reserve Bank officials have left the cash rate unchanged at a record low 0.25 per cent, allowing Treasurer Josh Frydenberg’s federal budget to have the economic limelight.

The same rate remains for the yield target on three-year government bonds, and there is no change to the term funding facility open to banks and other institutions.

The decision follows the central bank’s monthly meeting.

Reserve Bank Governor Philip Lowe said economic recovery from the coronavirus pandemic was under way in most parts of Australia, although this would be bumpy and uneven.

Mr Lowe said the high unemployment rate (7.5 per cent) was an important priority.

He noted the federal budget was due on Tuesday night, and said fiscal and monetary support would be required for some time given the economic outlook and prospect of high unemployment.

Mr Lowe said the bank’s policies were working as expected and helping lower borrowing costs and the supply of credit.

The term funding facility had provided $81 billion to banks and other institutions, he said. Another $120 billion is available.

Government bond markets were functioning well, Mr Lowe said.

In early September the bank bought another $2 billion in government securities to try and achieve its target. Its bought $63 billion worth since March. Three-year yields were at about 18 basis points in recent weeks.

He reiterated a previous commitment that the bank would not raise the cash rate until progress was made towards full employment and the board was confident inflation would be between two and three per cent.

The economy recorded deflation of 1.9 per cent for the June quarter.

Some economists had suggested the RBA would cut the rate ahead of the much-anticipated federal budget, to provide a united effort at helping the economy overcome the coronavirus recession.

The RBA has not changed the cash rate since March, when it used quantitative easing measures as the coronavirus pandemic took hold in Australia.

About brandsauthority

Check Also

A ‘Front-Row Seat’ to the Birth of a Comet

As Douglas Adams once said: Space is big. Really big. Consequently, scientists see only tiny …

%d bloggers like this: