RBA cuts cash rate to record low amid coronavirus concerns
The Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points to a new record low of 0.50% as the coronavirus outbreak impacts global financial markets.
RBA Governor Philip Lowe said the coronavirus has clouded the near-term outlook for the global economy and global growth in the first half of 2020 will be lower than earlier expected.
“Prior to the outbreak, there were signs that the slowdown in the global economy that started in 2018 was coming to an end,” Governor Lowe said in a statement.
“It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path.”
The RBA previously cut the official cash rate to 0.75% in October, which was the third interest rate cut in 2019.
Governor Lowe confirmed the RBA will continue to monitor developments closely and assess the implications of the coronavirus for the economy.
“The Board is prepared to ease monetary policy further to support the Australian economy,” Governor Lowe said.
More rate cuts on the way?
AMP Capital’s chief economist Shane Oliver predicted the cut, and he doesn’t believe it will be the only cut in 2020.
“The coronavirus outbreak coming on the back of the bushfires is likely to see the economy go backwards this quarter which in turn is likely to push unemployment up further after the rise to 5.3% seen in January.
“Growth should rebound in the March quarter but given…we are so far from full employment and the inflation target, the RBA is likely to cut the cash rate again in the months ahead,” Oliver said.
Governor Lowe also hinted that more rate cuts could be on the way in coming months, saying the RBA will continue to monitor developments closely and assess the implications of the coronavirus for the economy.
“The Board is prepared to ease monetary policy further to support the Australian economy,” Governor Lowe said.
Want to know what this rate cut means for your home loan?
With this being the fourth RBA cash rate cut since June 2019, it can get a bit confusing as to just how much of these cuts your lender is passing on to you.
The good news is we’re following the market closely and will keep you informed.
So if you’d like to find out, then please get in touch – we’re here to help !
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