During his monthly statement, RBA governor Philip Lowe reiterated that the central bank would not consider changes to the cash rate until its long-term targets of unemployment and inflation were met.
“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,” he said.
The RBA is expecting inflation to remain below 2 per cent over the next few years and is expecting the unemployment rate to hit 10 per cent in the coming months before ending 2020 at 7 per cent.
As a result, AMP chief economist Shane Oliver has predicted rates will remain lower for longer.
“For those focused on the RBA’s cash rate, the next few years are likely to be pretty boring,” he said.
“The cash rate is at the RBA’s long-stated lower bound and there is no value in taking it negative, so it won’t be cut any further.”
However, governor Lowe said the RBA remains prepared to employ alternative monetary policy measures to support the economy.
“[The central bank] will maintain its efforts to keep funding costs low in Australia and credit available to households and businesses,” he said.
“The board is committed to do what it can to support jobs, incomes and businesses during this difficult period and to make sure that Australia is well placed for the expected recovery.”
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