RBA keeps cash rate on hold.
In a statement accompanying the decision, RBA Governor Philip Lowe said –
At its meeting today, the Board decided to maintain the targets for the cash rate and the yield on 3-year Australian Government bonds of 25 basis points. It also decided to increase the size of the Term Funding Facility and make the facility available for longer.
The Term Funding Facility and the other elements of the Bank’s mid-March package are helping to support the Australian economy. There is a very high level of liquidity in the Australian financial system and borrowing rates are at historical lows.
Globally, an uneven economic recovery is under way after a very severe contraction in the first half of 2020. The future path of that recovery is highly dependent on containment of the virus. High or rising infection rates have seen a recent loss of growth momentum in some economies.
In Australia, the economy is going through a very difficult period and is experiencing the biggest contraction since the 1930s. As difficult as this is, the downturn is not as severe as earlier expected and a recovery is now under way in most of Australia. 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.
The Board is committed to do what it can to support jobs, incomes and businesses in Australia. Its actions, including today’s extension of the Term Funding Facility, are keeping funding costs low and assisting with the supply of credit to households and businesses. The Board will maintain highly accommodative settings as long as is required and continues to consider how further monetary measures could support the recovery. It 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.