Fundamental Comment

RBA holds rates, hints to more stimulus

RBA holds rates, hints to more stimulus

The Central Bank of Australia held its interest rates at a record low of 0.25 percent, while referred to the possibility of injecting more cash stimulus while looking forward to creating new jobs to support economy, which is suffering the worst shrink since the great depression. 

Interest rates stabilized at 0.25%, moving in line with market expectations, where the Bank stressed the target of 3-year-old bonds and the low-cost funding program that has recently been launched to lenders, while studying the application of other measures. 

The President of the Central Bank of Australia sees that the top priority right now is lowering unemployment and creating new jobs, and that the new stimulus procedures will support jobs. 

The Committee's decision-making is concerned about the risk of continued unemployment for a long time, which increases the expectations that the bank may resort to the November meeting to reduce the bond price for 3 years to 0.1%, with the Australian Central committed to buying bonds of 5 to 10 years’ maturity.  

The RBA decision came only hours before the government's announcement of its budget for 2020/21, which is expected to witness a record of A$200 billion. 

As for the Australian dollar, it to the highest level in a week against the US dollar at 0.7207, before returning to the decline and losing its gains at $0.7157.


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