The Reserve Bank yesterday kept rates unchanged at their historic low of 0.25 per cent.
Since cutting the official cash rate in an emergency meeting in March in response to the coronavirus spread, the RBA has said it has no intention to make any more cuts any time soon.
JP Morgan Australia chief economist Ben Jarman told News.com the move to keep rates as they are was widely expected.
“There aren’t any other obvious levers to be pulled right now given how much already has been done,” he said.”
In his official statement RBA governor Philip Lowe said the global economy as a whole was suffering a severe downturn thanks to COVID-19.
“Many people have lost their jobs and a sharp rise in unemployment is occurring,” he said.
“At the same time, the containment measures have reduced infection rates in a number of countries.”
“If this continues, a recovery in the global economy will start later this year, supported by both the large fiscal packages and the significant easing in monetary policies,” he said.
While the official cash rate remained unchanged, home loan interest rates continue to fall, with Homestar Finance setting a new record-low variable rate of 2.29 per cent.
Research director Sally Tindall told News.com this was a sign there’s still plenty of life in the market despite the COVID-19 challenge.
“The cash rate might have settled in at 0.25 per cent but competition between the lenders has continued to put downward pressure on home loan rates,” she said.
“We’ve already seen fixed rates hit record lows of just 2.09 per cent, while the lowest variable rate is now 2.29 per cent.”
“This will put pressure on other lenders to shave their lowest variable rates.”
“This kind of competition is great for homeowners in a position to refinance, because lenders are willing to do battle for their business.”