- The Reserve Bank of Australia (RBA) will maintain interest rates at the record low 0.1 per cent
- The central bank will also pump another $100 billion into the economy, adding to a total of $200 billion in commitments
- RBA Governor Philip Lowe believes the low rate will stay until significant inflation occurs — likely in 2024
- Lowe will be speaking at the National Press Club in Canberra on Wednesday to give further details
The Reserve Bank of Australia (RBA) announced on Tuesday that it will pump a further $100 billion into the country’s economy.
The RBA will also maintain the record low-interest rates of 0.1 per cent, a decision made at its first board meeting of the year.
This will continue the RBA’s quantitative easing program through the purchase of Australian Government bonds. The central bank will purchase the stimulus at $5 billion per week, starting in April.
RBA Governor Philip Lowe says the record low rate will stay until inflation is within a 2 to 3 per cent range — likely to happen in 2024.
“For this to occur, wages growth will have to be materially higher than it is currently,” he said.
“This will require significant gains in employment and a return to a tight labour market”.
Lowe did acknowledge optimism in the country’s battle with COVID-19 with a nod to the reduced unemployment rate.
“[the economy is] underpinned by Australia’s success on the health front and the very significant fiscal and monetary support,” he said.
Australia’s unemployment rate recently fell to 6.6 per cent.
The RBA’s decision to purchase another $100 billion in Government bonds now amounts to $200 billion in total — keeping a promise made last November.
Lowe expects the economy to return to a pre-pandemic strength this year, and grow it a further 3.5 per cent by the end of 2022.
“The outlook for the global economy has improved over recent months due to the development of vaccines,” he said.
“While the path ahead is likely to remain bumpy and uneven, there are better prospects for a sustained recovery than there were a few months ago”.
Lowe will address the National Press Club in Canberra on Wednesday.