The Reserve Bank of Australia has retained the official cash interest rate at its lowest level of 0.25 percent. The decision was widely expected by analysts and economists.
RBA Governor Philip Lowe gave a more positive outlook as the country gradually reopens its economy. He pointed out that their fiscal policy would have to have a more important role than the monetary policy which was the focus in the last 20 years.
With regards to the coronavirus pandemic, Lowe noted some signs of recovery in Australia. These include a decline in new infections, easing of restrictions, a pick-up in consumer spending and easing of social distancing regulations at different places. Partial lockdowns have also ended.
In the housing sector, demand for new and established housing had dropped. Lower incomes and confidence were expected to affect demand for new housing for the long term. Members of the board also discussed the supply of rental housing had increased as properties are now offered as long-term accommodation.
As for the labour market, the outlook was that labour income is not expected to grow in the near term. The government, however, continues to provide social assistance payments to support household incomes during this period. Lower interest payments had been helpful in boosting household incomes with mortgages and other debt.
Australia has reported about 7,200 coronavirus cases. So far, no death was reported for more than a week. As a result of this, the Australian dollar soared to five-month highs. The country has also recovered around half of its losses since late March thereby resulting in a slowdown in the spread of Covid-19 and the strong policy responses.
The global economy was expected to recover in the second half of the year. The International Monetary Fund, however, was forecasting a large contraction for the entire 2020.
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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.