- The Reserve Bank has held the cash rate for October in a bid to support Australia’s recovering economy
- For the rest of this month, the rate will stay at the historically low 0.25 per cent
- The decision comes just hours before the Federal Government’s budget announcement, which is tipped to include the biggest deficit in modern times
- Prior to today, there was speculation the cash rate could be slashed to a fresh low of 0.1 per cent
- But the central bank said keeping the rate on hold would support the economy’s recovery and keep the budget at “centre stage”
- While the possibility of future rate cuts are at least a month off, the Reserve Bank of Australia (RBA) says the priority should be reducing Australia’s jobless rate
The Reserve Bank has held the cash rate for October in a bid to support Australia’s recovering economy.
For the rest of this month, the rate will stay at the historically low 0.25 per cent, while the target yield for three-year government bonds will also remain steady.
The decision comes just hours before the Federal Government’s budget announcement, which is tipped to include the biggest deficit in modern times.
Prior to today, there was speculation the cash rate could be slashed to a fresh low of 0.1 per cent. But, the central bank said keeping the rate on hold would support the economy’s recovery and keep the budget at “centre stage.”
“A recovery is now underway in most of Australia, although the second-wave outbreak in Victoria has resulted in a further contraction in output there,” Reserve Bank of Australia (RBA) Governor Philip Lowe stated.
“The national recovery is likely to be bumpy and uneven and it will be some time before the level of output returns to its end 2019 level,” he continued.
Moving forward, the RBA has signalled a further rate could be possible next month. In the meantime, it’ll keep its eyes set on the national unemployment rate.
Over July, unemployment peaked at 7.5 per cent — a 22-year high — although it’s since slipped to 6.8 per cent in September.
While the RBA Governor believes the unemployment rate won’t reach the previously anticipated 10 per cent by year’s end, he still maintains figures will remain high for a prolonged period.
“The board continues to consider how additional monetary easing could support jobs as the economy opens up further,” Philip Lowe concluded.