Invest
Rates unchanged but uncertain economic recovery remains
The RBA has held the official cash rate at 0.25 per cent but warns of an uncertain future, with unemployment and consumer spending remaining a major stumbling block for Australia’s economic recovery.

Rates unchanged but uncertain economic recovery remains
The RBA has held the official cash rate at 0.25 per cent but warns of an uncertain future, with unemployment and consumer spending remaining a major stumbling block for Australia’s economic recovery.

In a statement to the media, governor of the Reserve Bank Philip Lowe outlined how the economy is facing its biggest contraction since the 1930s, with only government spending keeping Australians employed.
“Many people have lost their jobs, and there has been a sharp rise in unemployment. Leading indicators have generally picked up recently, suggesting the worst of the global economic contraction has now passed,” Mr Lowe said.
“Despite this, the outlook remains uncertain, and the recovery is expected to be bumpy and will depend upon containment of the coronavirus.”
Mr Lowe highlighted that consumer spending still remains a major headwind for the nation’s economic recovery.
“Uncertainty about the health situation and the future strength of the economy is making many households and businesses cautious, and this is affecting consumption and investment plans,” the governor continued.
However, the governor believes the economy is starting to show signs of improvement.
“Conditions have, however, stabilised recently and the downturn has been less severe than earlier expected,” he said.
The ABS estimates that a combined group of around 2.3 million people – around one in five employed people – were affected by either job loss between April and May or had less hours than usual for economic reasons in May.
However, the governor pointed out how the rate of change has slowed with Australians gradually emerging post COVID-19 lockdowns.
“While total hours worked in Australia continued to decline in May, the decline was considerably smaller than in April and less than previously thought likely,” Mr Lowe said.
“There has also been a pick-up in retail spending in response to the decline in infections and the easing of restrictions in most of the country.”
“Notwithstanding the signs of a gradual improvement, the nature and speed of the economic recovery remains highly uncertain,” he said.
Mr Lowe once again called for additional fiscal support to help guide the economy through a difficult period.
“The substantial, coordinated and unprecedented easing of fiscal and monetary policy in Australia is helping the economy through this difficult period. It is likely that fiscal and monetary support will be required for some time,” Mr Lowe concluded.
About the author

About the author


Economy
Markets react to Biden’s stimulus package
The US markets have reacted negatively to President-elect Joe Biden’s US$1.9 trillion ($2.44 trillion) bailout proposal, amid mass job losses as the US continues to struggle with the COVID-19 pandem...Read more

Economy
‘Aussies to keep economy ticking with $200bn in savings’
The government is counting on Aussies to use their savings to drive economic recovery once temporary support measures are wound back at the end of March. ...Read more

Economy
Business improves but COVID threat remains
The Australian economy continues to show signs of life, with businesses’ payment times improving despite recent outbreaks of COVID-19, new research has revealed. ...Read more

Economy
10 impacts the US ‘blue wave’ will have on investors
With the US Senate run-off falling to the Democrats, a new blue wave is spurring optimism for investors, a chief strategist has said. ...Read more

Economy
Frydenberg confident vaccine rollout will boost the economy
The economy and the budget are expected to reap the benefits of the earlier than planned vaccine rollout, following a series of unexpected lockdowns which have already put a dent on the government’s...Read more

Economy
Australian economy back to pre-COVID levels by 2021
The Australian economy is expected to bounce back to pre-COVID levels by the end of 2021 as wins on the health front and aggressive government policy have limited damage while boosting business and co...Read more

Economy
Economy to recover from weakest year since WWII
The global economy is expected to recover in 2021 following the weakest year since World War II, with fiscal and monetary policy continuing to support world economies, a big four bank has forecasted. ...Read more

Economy
‘Lagging the world’: Australia’s fintechs grew despite lack of incentives
Australia’s fintech sector continues to grow, despite the challenges of the COVID-19 recession, new research has shown. ...Read more

Economy
Markets react to Biden’s stimulus package
The US markets have reacted negatively to President-elect Joe Biden’s US$1.9 trillion ($2.44 trillion) bailout proposal, amid mass job losses as the US continues to struggle with the COVID-19 pandem...Read more

Economy
‘Aussies to keep economy ticking with $200bn in savings’
The government is counting on Aussies to use their savings to drive economic recovery once temporary support measures are wound back at the end of March. ...Read more

Economy
Business improves but COVID threat remains
The Australian economy continues to show signs of life, with businesses’ payment times improving despite recent outbreaks of COVID-19, new research has revealed. ...Read more

Economy
10 impacts the US ‘blue wave’ will have on investors
With the US Senate run-off falling to the Democrats, a new blue wave is spurring optimism for investors, a chief strategist has said. ...Read more

Economy
Frydenberg confident vaccine rollout will boost the economy
The economy and the budget are expected to reap the benefits of the earlier than planned vaccine rollout, following a series of unexpected lockdowns which have already put a dent on the government’s...Read more

Economy
Australian economy back to pre-COVID levels by 2021
The Australian economy is expected to bounce back to pre-COVID levels by the end of 2021 as wins on the health front and aggressive government policy have limited damage while boosting business and co...Read more

Economy
Economy to recover from weakest year since WWII
The global economy is expected to recover in 2021 following the weakest year since World War II, with fiscal and monetary policy continuing to support world economies, a big four bank has forecasted. ...Read more

Economy
‘Lagging the world’: Australia’s fintechs grew despite lack of incentives
Australia’s fintech sector continues to grow, despite the challenges of the COVID-19 recession, new research has shown. ...Read more