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Lee Sue Ann, Economist at UOB Group, reviewed the latest decision by the RBA at its monthly monetary policy meeting.

Key Quotes

“As expected, the Reserve Bank of Australia (RBA) left the official cash rate (OCR) on hold… at a record-low of 0.25%.”

“To recap, the RBA had decided to take interest rates to a record-low, buy government bonds (QE) in a bid to reduce national funding costs and extend a AUD90bn credit line to banks to lend to small businesses.”

“Since QE begun on 20 March, the RBA has bought around AUD36bn buying state government bonds on the secondary market in a move that has pushed down interest rates on that debt.”

“The RBA reiterated its commitment to ‘doing what it can to support jobs, incomes and businesses as Australia deals with the coronavirus’. For now, we hold the view of the OCR staying put at 0.25%, and QE will remain for at least some time. This will continue to provide support for the government’s fiscal policy, which involves about AUD$80bn of measures including cash payments to small businesses and loan guarantees.”