The RBA has announced its latest decision on interest rates and expanded its support for authorised deposit-taking institutions (ADIs).
The RBA has left rates on hold at their historic low of 0.25 per cent and expanded its term funding facility for ADIs.
“To date, ADIs have drawn $52 billion under the term funding facility and further drawings are expected over coming weeks,” said governor Philip Lowe.
“Today’s change brings the total amount available under this facility to around $200 billion. This will help keep interest rates low for borrowers and support the provision of credit by providing ADIs greater confidence about continued access to low-cost funding.”
The RBA’s base case is for the Australian economy to contract by 6 per cent through the rest of the year, with more pain expected if the reopening is hampered by further virus outbreaks.
“(The RBA) views the March monetary easing package as continuing to help the economy and the main action now being in fiscal policy,” said AMP Capital chief economist Shane Oliver.
“There is a significant chance it may cut the cash rate to 0.1 per cent and it may do more aggressive quantitative easing but that would not be for several months. And it remains “extraordinarily unlikely” to cut the cash rate below zero. The next interest rate move of significance is likely to be a hike but with high unemployment and underemployment, lots of spare capacity in the economy and underlying inflation way below target this is at least three years away.”
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