RBA Cash Rate Down by 0.15%

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.”
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