The Reserve Bank of Australia has decreased the official cash rate to a historic low of 0.1%. The board has decided on a package of further measures to support job creation and the recovery of the Australian economy from the pandemic.

RBA Governor, Phillip Lowe, announced that the package will be comprised of “a reduction in the cash rate target to 0.1%, a reduction in the target for the yield on the 3-year Australian Government bond to around 0.1%, a reduction in the interest rate on new drawings under the Term Funding Facility to 0.1%, a reduction in the interest rate on Exchange Settlement balances to zero, [and] the purchase of $100 billion of government bonds of maturities of around 5 to 10 years over the next six months.”

The combination of the RBA’s bond purchases and lower interest rates across the yield curve will assist the recovery by lowering financing costs for borrowers, contributing to a lower exchange rate than otherwise.

Lowe also adds that “given the outlook, the Board is not expecting to increase the cash rate for at least three years.”