World News – UA – RBA cuts cash rate, ready to do more

Reserve Bank of Australia cut cash rate to record highs and says it is ready to do more if needed

At its board meeting on Tuesday, the RBA agreed to cut the cash rate to just 01 percent from 025% and made similar cuts for other measures to hold rates market interest and low financing costs throughout the economy

« As Australia faces a period of high unemployment, the Reserve Bank has pledged to do what it can to support job creation, » the Bank’s governor said on Tuesday reserve, Philip Lowe, in his post-meeting statement

However, he believes the economic recovery is underway in Australia and positive economic growth is now expected for the September quarter, despite restrictions in Victoria

If the rate cut is fully passed on by the banks, the average monthly savings could be around $ 33 per month on a $ 400,000 loan for a homeowner paying principal and interest

The central bank also cut its target three-year bond rate of return and the rate on its term financing facility for banks to 010 percent from 025 percent

The Reserve Bank has also implemented a $ 100 billion bond purchase program for five to ten year Australian government or government bond maturities The size of the bond program will be monitored

Dr Lowe said the combination of RBA bond purchases and falling interest rates on the bond yield curve will facilitate the recovery by lowering financing costs for borrowers and helping to a fall in the exchange rate

The board will not increase the buyback rate until actual inflation is sustainably within the target range of 2-3%

« For this to happen, wage growth will need to be significantly higher than it is now, » Dr Lowe said

« This will require significant job gains and a return to a tight labor market Given the outlook, the council does not plan to increase the cash rate for at least three years »

The reduction in the reimbursement rate is the first since March of this year, where it was reduced twice in the month, the second coming at a special board meeting at the start of the pandemic

Reserve Bank of Australia Official Cash Rate, Philip Lowe