Australian Interest Rate Cut

March 19, 2020

The Reserve Bank of Australia, which at a scheduled meeting on March 3 had cut its official cash rate by 25 basis points, cut the OCR by an additional 25 bps today to a record low of 0.25%. This move was only part of a multi-pronged package spelled out in a statement. A significant loss of jobs is predicted over a number of months in spite of the stimulus. (Australia was one of very few economies not to experience a recession in 2007-9). Among other actions unveiled by the central bank today, a promise was made not to lift the OCR before until evidence arises of a return toward full employment and officials become confident about a return of inflation to the 2-3% target. Asset purchases will be used to target the 3-year Aussie government bond yield at around 0.25%, and a term funding facility for the banking system was introduced, with particular support for credit to small and medium-sized businesses.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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