Invest
Central bank optimistic amid COVID relief packages
A better than expected outcome on the health front could see a shallower than expected economic impact, with governments easing lockdown measures earlier than anticipated, the Reserve Bank has noted.
Central bank optimistic amid COVID relief packages
A better than expected outcome on the health front could see a shallower than expected economic impact, with governments easing lockdown measures earlier than anticipated, the Reserve Bank has noted.
The Reserve Bank of Australia (RBA) has released minutes from its monetary policy board meeting earlier this month, at which it unsurprisingly held the official cash rate at the “lower bound” of 0.25 per cent.
The central bank acknowledged the severity of the challenges facing the Australian economy, which it said has slipped into the deepest downturn in almost 90 years.
“Members recognised that the Australian economy was experiencing the biggest economic contraction since the 1930s,” the RBA stated.
“A very large number of people had lost their jobs or were working zero hours, household spending had weakened considerably, and some investment was being deferred or had been cancelled.”
But, according to the central bank, the light at the end of the tunnel may be closer than initially anticipated.
“Notwithstanding these developments, it was possible that the downturn would be shallower than earlier expected,” the RBA added.
“The rate of new infections had declined significantly, and some restrictions had been eased earlier than had previously been thought likely.”
Despite the renewed optimism, the RBA warned that the outlook remained “highly uncertain”, with the pandemic likely to have “long-lasting effects on the economy”.
According to the central bank, its monetary policy strategy, which also included a quantitative easing program and a $90-billion term funding facility, helped stabilise the financial system through the hardship.
“Members agreed that the bank’s policy package was working broadly as expected. The package had helped to lower funding costs and stabilise financial conditions, and was supporting the economy,” the central bank said.
“The package had also contributed to a significant improvement in the functioning of government bond markets, and the yield on three-year Australian government bonds was at the target of around 25 basis points.
“Given these developments, the bank had purchased government bonds on only one occasion since the previous meeting, although it was prepared to scale up these purchases again, if necessary, to achieve the yield target and ensure bond markets remain functional.”
The board reiterated that the 0.25 per cent target rate would remain in place “until progress was made towards the goals for full employment and inflation”.
The central bank concluded by lauding the “substantial, coordinated and unprecedented” level of fiscal and monetary policy stimulus.
“It was likely that this fiscal and monetary support would be required for some time,” the central bank stated.
“The board remained committed to supporting jobs, incomes and businesses and to making sure that Australia is well placed for recovery.
“Its actions were keeping funding costs low and supporting the supply of credit to households and businesses. This accommodative approach would be maintained as long as required,” the RBA concluded.
Did you enjoy this article? You may also be interested in:
- RBA reveals its June Cash Call
- Home loan arrears set to rise, RBA warns
- Experts predict economy won't recover until 2022
About the author
About the author
Economy
CPI data another piece in RBA's interest rate decision puzzle, says REIA
The latest Consumer Price Index (CPI) data from the Australian Bureau of Statistics (ABS) shows that inflation rose 3.4% in the 12 months to February 2024, unchanged from the previous two months, ...Read more
Economy
Including passive job seekers in unemployment measure doesn't impact economic cycle view, study finds
New research from e61 Institute has found that while current unemployment measures may not capture all job seekers, broader definitions that include passive job searchers do not provide better ...Read more
Economy
Survey reveals heightened job security concerns among IT workers in 2024
A recent survey conducted by Authority Hacker has revealed that 89.66% of IT workers in the United States have increased concerns about job loss in 2024. Read more
Economy
Australian founders adapt to the challenging fundraising environment with optimism and strategic shifts
The landscape for start-up funding in Australia has been increasingly challenging, but this has not dampened the spirit of the country's entrepreneurs. Read more
Economy
Signs point to possible US economic 'soft landing' in ClearBridge analysis
The US economy may be steering towards a 'soft landing' despite mixed signals from the stock market, according to a recent analysis by ClearBridge Investments. Read more
Economy
Alternative fund managers predict capital raising surge in 2024
Alternative investment fund managers are predicting a sizable increase in capital raising efforts in 2024, according to a global study by Ocorian, a leading alternative investment fund administratorRead more
Economy
Understanding the economic indicators that affect your earnings
The landscape of personal finance is profoundly influenced by broader economic trends and indicators. Read more
Economy
Navigate market turbulence with expert advice: no crystal ball needed
In an era fraught with investment market uncertainties, from fluctuating interest rates to geopolitical strife, seasoned market experts are guiding investors through the mire, offering sage advice on ...Read more
Economy
CPI data another piece in RBA's interest rate decision puzzle, says REIA
The latest Consumer Price Index (CPI) data from the Australian Bureau of Statistics (ABS) shows that inflation rose 3.4% in the 12 months to February 2024, unchanged from the previous two months, ...Read more
Economy
Including passive job seekers in unemployment measure doesn't impact economic cycle view, study finds
New research from e61 Institute has found that while current unemployment measures may not capture all job seekers, broader definitions that include passive job searchers do not provide better ...Read more
Economy
Survey reveals heightened job security concerns among IT workers in 2024
A recent survey conducted by Authority Hacker has revealed that 89.66% of IT workers in the United States have increased concerns about job loss in 2024. Read more
Economy
Australian founders adapt to the challenging fundraising environment with optimism and strategic shifts
The landscape for start-up funding in Australia has been increasingly challenging, but this has not dampened the spirit of the country's entrepreneurs. Read more
Economy
Signs point to possible US economic 'soft landing' in ClearBridge analysis
The US economy may be steering towards a 'soft landing' despite mixed signals from the stock market, according to a recent analysis by ClearBridge Investments. Read more
Economy
Alternative fund managers predict capital raising surge in 2024
Alternative investment fund managers are predicting a sizable increase in capital raising efforts in 2024, according to a global study by Ocorian, a leading alternative investment fund administratorRead more
Economy
Understanding the economic indicators that affect your earnings
The landscape of personal finance is profoundly influenced by broader economic trends and indicators. Read more
Economy
Navigate market turbulence with expert advice: no crystal ball needed
In an era fraught with investment market uncertainties, from fluctuating interest rates to geopolitical strife, seasoned market experts are guiding investors through the mire, offering sage advice on ...Read more