News

RBA leaves interest rates unchanged in the face of COVID-19 turmoil

06 August 2020

In amongst the turmoil of another round of COVID lockdown in Victoria, the RBA has kept the official cash rate steady at 0.25 per cent for another month.

RBA governor Philip Lowe has recently made comments off the back of June economic statistics suggesting the economy has turned a corner but Finder.com’s insights manager Graham Cooke says it all depends on containing the spread of coronavirus.

“The virus situation has rapidly deteriorated since June,” he told Property Observer.

“As Melbourne enters a Stage 4 lockdown, businesses are once again bracing for restrictions and closures that will no doubt send economic shock waves across the country.”

CreditorWatch CEO Patrick Coughlan said the RBA was keeping rates steady while trying to balance the economy during the pandemic crisis.

"Once the likes of JobKeeper, JobSeeker, Mortgage Holidays and Safe Harbour do eventually come to an end, there will be a seismic shock to the economy as companies will have to either fend for themselves or admit defeat,” he told Property Observer.

“With ten per cent of all businesses in Australia in danger of failing because of lack of cash, we could potentially end up seeing ten years’ worth of administration in the next six months."

In the RBA’s post-meeting statement for August, governor Philip Lowe said the economic downturn wasn’t as bad expected and recovery was underway.

"This recovery is, however, likely to be both uneven and bumpy, with the coronavirus outbreak in Victoria having a major effect on the Victorian economy," he added.

"It is likely that fiscal and monetary stimulus will be required for some time given the outlook for the economy and the labour market," he said.

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