Saturday, 11 July 2020
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Australia Central Bank Pins Hope on Quicker Economic Recovery After Pandemic Shutdown

Australia™s central bank held rates at all-time lows on Tuesday and sounded less gloomy as the economy gradually re-opens during what is likely to be the worst quarter since the Great Depression.

The Reserve Bank of Australia (RBA) left rates at 0.25% at its monthly policy meeting in a widely expected decision, and said the œaccommodative approach will be maintained as long as it is required.

In a short post-meeting statement Governor Philip Lowe said the RBA was prepared to scale up government bond purchases if needed to ensure three-year yields held around 25 basis points.

Australia™s A$2 trillion ($1.4 trillion) economy is experiencing its biggest contraction since the 1930s in the current quarter but œit is possible that the depth of the downturn will be less than earlier expected, Lowe added.

A significant decline in new infections, earlier-than-expected easing of restrictions and signs that hours worked stabilised in early May auger well for a recovery.

œThere has also been a pick-up in some forms of consumer spending, Lowe added.

States and territories across Australia have been easing social distancing regulations at differing paces in recent weeks, slowly ending a partial lockdown ordered in March, having largely contained the COVID-19 pandemic.

Australia, which has about 7,200 coronavirus cases, has not reported a death from the disease for more than a week.

The country's success in containing the virus has sent the Aussie dollar AUD=D3 soaring to five-month highs. Yet, that is leaning against monetary stimulus and won't be welcome by the RBA.

The central bank made no mention of the exchange rate in the statement.

Source : Reuters

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