The Reserve Bank of Australia today decided to further reduce the current official cash interest rate by another 0.25 basis points. This makes the new 0.50 percent rate the new historic low after the last cut in October 2019.
The rate has been kept on hold since its last point cut in October. The decision was also in support of the global coronavirus outbreak which has affected many economies and growth outlook for 2020.
In his monetary policy statement earlier, RBA Governor Philip Lowe noted that the GDP growth in the March quarter will be weaker than expected. He further said that the economy’s slowdown that began in 2018 was already showing signs of improvement but with the effects of the coronavirus, “it is too early to tell at what point the global economy will return to an improving path.” He added that the bank’s goal for full employment and inflation will be delayed due to this virus.
Lowe remains hopeful that once the coronavirus is contained, the Australian economy will return to its improving trend.
Several major banks earlier announced its decision to reduce variable interest rates by 0.25 percent particularly for home loans. They were Westpac, Commonwealth Bank and NAB.
The Australian government has also said it will assist areas of the economy adversely affected by the virus.
Last year, the interest rate was lowered three times in response to a sluggish economy. Sectors that were badly affected included retail sales, construction and business investment. Growth in wages was also slow while unemployment and underemployment went up.
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By Wendy Chamberlain
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With a passion for all things real estate spanning over 20 years, Wendy loves that her role as a Buyers Agent and Sellers Advocate gives her buying and selling clients an experienced voice they can trust when it comes to negotiating to buy or sell something as important as their home or investment. Wendy considers it a privilege to be asked to help others realise such an important goal as home ownership and to be trusted with that honour. Get in touch today via www.wendychamberlain.com.au for a no obligation chat about how Wendy can work with you and help you save time and money to secure your new home sooner.