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Borrow

Record low remains for the next 3 years

  • May 06 2020
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Borrow

Record low remains for the next 3 years

By Cameron Micallef
May 06 2020

Australia will remain in a low-growth, low-inflation economy, leaving rates untouched for the next three years, modelling from the central bank shows.

Philip Lowe

Record low remains for the next 3 years

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  • May 06 2020
  • Share

Australia will remain in a low-growth, low-inflation economy, leaving rates untouched for the next three years, modelling from the central bank shows.

Philip Lowe

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.

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“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.”

Record low remains for the next 3 years
Philip Lowe
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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