After an emergency cut to interest rates just weeks ago the RBA has this week left them unchanged at 0.25 per cent at its April meeting.
The emergency cut in March in response to the escalating coronavirus crisis was the first time the central bank has cut rates outside of a scheduled meeting since 1997.
“The coronavirus remains first and foremost a very major public health issue, but it is also having very significant effects on economies and financial systems around the world,” RBA governor Philip Lowe said.
“Many countries are expected to experience large economic contractions as a consequence of the public health response.”
“Large increases in unemployment are also expected,” he said.
“Once the virus is contained, a recovery in the global economy is expected, with the recovery supported by both the large fiscal packages and the significant easing in monetary policy that has taken place.”
Dr Lowe said in a statement the RBA is focused on helping to support jobs, incomes and businesses.
“The comprehensive policy package announced last month will also support the expected recovery,” he said.
“The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2-3 per cent target band.”
The move to keep rates unchanged was largely expected by most economists who now say they expect rates to stay at 0.25 per cent for an extended period.
CoreLogic head of research, Eliza Owen, said March was an extraordinary month with two cash rate reductions.
“The record-low rate of 0.25 per cent may be in place for years to come,” she told News.com.
“No doubt the RBA will be closely monitoring the impact of record low interest and other stimulus measures on the economy.”
Finder insights manager Graham Cooke said the coronavirus would likely have a huge impact on the property market.
“Many economists tell us they expect property price drops of 10 to 20 per cent,” he told News.com.
“The biggest impact, however, is likely to be on sales volume.”
“With auctioneers forced to allow only one-on-one home visits and virtual auctions, and with many Aussies losing their jobs, it is likely that the housing market will hit the brakes fairly quickly.”
