The Reserve Bank of Australia has held official interest rates at 0.25 per cent as it waits to see how the economy is responding to the efforts of it and the Morrison government to offset the financial fallout from the coronavirus pandemic.
Tuesday’s outcome was expected by financial markets after the bank last month decided to take interest rates to a record low, buy government bonds in a bid to reduce national funding costs and extend a $90 billion credit line to banks to lend to small businesses.
The RBA has spent more than $30 billion buying state government bonds on the secondary market in a move that has pushed down interest rates on that debt. The federal government’s debt agency on Tuesday sold another $1 billion of debt, which will not be repaid until 2031, with an interest rate of 0.899 per cent.
The bank’s decision came after the Australian Bureau of Statistics released a special survey of how businesses are responding to the pandemic, with two-thirds reporting a hit to their cash flow and turnover.
Almost half of firms say they have changed their workforces, with many cutting hours or putting their staff on leave without pay.
More to come
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