Australia’s central bank on Tuesday kept interest rates on hold at a record low, despite expected economic pain from the country’s devastating bushfire crisis and the deadly outbreak of coronavirus in China, reports BSS/AFP. The Reserve Bank of Australia (RBA) has kept the cost of borrowing unchanged since lowering rates to 0.75 percent in October as part of efforts to extend a record 29-year run without a recession.
On Tuesday, the bank shrugged off concerns over the economic impact of the months-long bushfire disaster, with RBA governor Philip Lowe saying the blazes would “temporarily weigh on domestic growth” in the short term.
In a statement announcing rates would be kept on hold, Lowe pointed to slightly improved jobs figures — with the unemployment rate declining to 5.1 percent in December — and an uptick in previously flagging housing markets as factors in the decision.
The RBA left its economic growth forecast unchanged at 2.75 percent for 2020, rising to around three percent next year. ‘Uncertainty’ Lowe said stronger global growth was expected in 2020, despite the novel coronavirus outbreak in China and lingering US-China trade tensions, which he singled out as sources of “uncertainty” for the global economy.
However, many analysts believe rates could be cut further in the coming months. Lowe said the RBA board “remains prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time”.
“Due to both global and domestic factors, it is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target,” he said.