RBA holds cash rate at 0.25%. Flags 10% unemployment

Statement by Philip Lowe, Governor: Monetary Policy Decision:

At its meeting today, the Board decided to maintain the current policy settings, including the targets for the cash rate and the yield on 3-year Australian Government bonds of 25 basis points.

The global economy is experiencing a severe downturn as countries seek to contain the coronavirus. Many people have lost their jobs and a sharp rise in unemployment is occurring. At the same time, the containment measures have reduced infection rates in a number of countries. If this continues, a recovery in the global economy will start later this year, supported by both the large fiscal packages and the significant easing in monetary policies.

Globally, financial markets are working more effectively than they were a month ago, although conditions have not completely normalised. This improvement reflects both the decline in infection rates and the substantial measures undertaken by central banks and fiscal authorities. Credit markets have progressively opened to more firms and long-term bond rates remain at historically low levels.

In Australia, the functioning of the government bond markets has improved and the yield on 3-year Australian Government Securities (AGS) is at the target of around 25 basis points. Given these developments, the Bank has scaled back the size and frequency of bond purchases, which to date have totalled around $50 billion. The Bank is prepared to scale-up these purchases again and will do whatever is necessary to ensure bond markets remain functional and to achieve the yield target for 3-year AGS. The target will remain in place until progress is being made towards the goals for full employment and inflation.

The Bank’s daily open market operations are continuing to support credit and maintain low funding costs in the economy. To assist with the smooth functioning of Australia’s capital markets, the Bank has decided to broaden the range of eligible collateral for these operations to include Australian dollar securities issued by non-bank corporations with an investment grade credit rating. More details are provided in the accompanying market notice.

The Australian economy is going through a very difficult period and there is considerable uncertainty about the outlook. Reflecting this uncertainty, the Board considered a range of scenarios at its meeting. In the baseline scenario, output falls by around 10 per cent over the first half of 2020 and by around 6 per cent over the year as a whole. This is followed by a bounce-back of 6 per cent next year.

There has been a substantial, coordinated and unprecedented fiscal and monetary response in Australia to the coronavirus. Without this response, the outlook would have been even more challenging. These policies are supporting the economy right now and will help when the recovery comes. They are supporting people’s incomes, maintaining the important connections between businesses and their employees, underpinning the supply of credit to businesses and households, and keeping borrowing costs low. The deferral of loan and other payments is helping people manage their cash flows. The Australian banking system, with its strong buffers of capital and liquidity, is also helping the economy traverse this difficult period.

In the baseline scenario considered by the Board, the unemployment rate peaks at around 10 per cent over coming months and is still above 7 per cent at the end of next year. A lower unemployment rate than this is possible if the reduction in labour demand is accompanied by a larger reduction in average hours worked, rather than by people losing their jobs.

The Board also considered other scenarios. A stronger economic recovery is possible if there is further substantial progress in containing the coronavirus in the near term and there is a faster return to normal economic activity. On the other hand, if the lifting of restrictions is delayed or the restrictions need to be reimposed or household and business confidence remains low, the outcomes would be even more challenging than those in the baseline scenario. These scenarios will be discussed in the Statement on Monetary Policy, to be released later this week.

In the various scenarios considered by the Board, inflation remains below 2 per cent over the next few years. In the March quarter just passed, CPI inflation rose to 2.2 per cent, but it is expected to turn negative temporarily in the June quarter, due to falls in oil prices, the introduction of free child care and deferrals of various price increases. Further out, in the baseline scenario inflation is 1 to 1½ per cent in 2021 and gradually picks up further from there.

Given this outlook, the Bank will maintain its efforts to keep funding costs low in Australia and credit available to households and businesses. The Board is committed to do what it can to support jobs, incomes and businesses during this difficult period and to make sure that Australia is well placed for the expected recovery. The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target band.

Leith van Onselen


  1. “A lower unemployment rate than this is possible if the reduction in labour demand is accompanied by a larger reduction in average hours worked, rather than by people losing their jobs.”


    • C.M.BurnsMEMBER

      save housing (less unemployed) but absolutely smash all discretionary spending (every household on reduced hours reduces spending much much more)

      About what you’d expect from a high priest of the cult of propertology

    • DingwallMEMBER

      ie Pimp my “employed” numbers

      The ABS defines people as ’employed’ if they work one hour or more in the reference week.

    • happy valleyMEMBER

      Why don’t the ivory tower RBA happy clappies lead from the front and reduce their own hours and job share? NIMBY eh Captain Phil?

  2. SnappedUpSavvyMEMBER

    one reason I subscribe is for the highlighted sections of the statement, so there is nothing worth even reading in this one? cos i’d prefer to blowtorch my nipples off then read lowe’s statement

    • MountainGuinMEMBER

      I assume somewhere in the statement is an apology for having rates too low for too long meaning that we now have too much debt and no room to cut rates now we need it. Thanks RBA and I look forward to your apology for contributing to a bank failure and large taxpayer bailout in the not to distant future.

    • Your strategic use of then instead of than makes me respect you so much more.

  3. DingwallMEMBER

    They could have just said ….

    We are overly hopeful as usual but that could change as reality bites …….. or doesn’t. Things are going to go down a bit then back up a bit and possibly bounce around before reaching our targets ………….. sometime in the future …… or not..
    Frankly we don’t know wtf is going to happen…….. but we will try to help … sort of.
    Good luck
    Phil xx

  4. happy valleyMEMBER

    How magnanimous of the RBA happy clappies keeping the cash rate (which is not even the rate used to price property lending) at 0.25% pa after having screwed savers and retail depositors to the death, all the way down from 5% pa or thereabouts 8 years ago to 0.25% pa now. It’s great when your sh.t doesn’t stink.

    • Its called negative interest rates when IRs are lower than inflation. Very bad policy when combined with a never ending inflation busting house price boom.

  5. AndynycMEMBER

    I love the part where they help pay the debt for crap corporates. How long before they buy shares directly? Grubs

  6. Hill Billy 55MEMBER

    Laugh how they continually reference those buying houses as being of concern. The housing sector ( like, people) are actually net savers, so they (really, we) are being crucified at the altar of propertology for the sake of the few.

    • That’s a good point. Homeowners should be forced to use up their house equity, before being eligible for welfare. Just like how people are asked to draw out their super.

  7. I love how they say they’ll do whatever it takes to keep the 3 year ACGB at 0.25%. Given the current circumstances, no one is going to try to push it higher.

    How about doing whatever it takes to actually get the economy moving again? This will require more than lowering the credit rating of collateral accepted in repo. A list of possible options includes:
    – cutting rates into negative territory
    – extending YCC out to the 5-yr or even 10-yr sector
    – purchasing bonds directly from the Commonwealth, states and territories
    – purchasing other assets – ETFs in credit or equities
    – direct unsterilised FX intervention.

    Plenty on the smorgasbord but all we get is collateral on repo….

  8. “We believe our ivory tower is sufficiently impregnable to the ‘rona zombie hordes that everything is still awesome.”

  9. 10% unemployment?
    It was already 10.3% real unemployed in February 2020 (Roy Morgan 1.2 million unemployed & 1.1 million seeking work =2.3 million)
    It’s now 2.2 million unemployed, plus at least 1.3 million or more seeking work – 3.5 million or 18% real unemployed and growing.

    It’s time Australia woke up to itself & took decisive action on the TR migrant guestworkers & then the PR.

    With 2.2 million Australians unemployed & growing, another 1.3 million seeking work – the TR (and PR) migrant guestworker overburden needs to be dealt with.

    TR – Temporary Residents.
    We have 2.3 million non Australian temporary residents migrant guestworkers. Almost 1 for 1 for every Australian unemployed…

    The vast majority are on a pretext visa alibi (865,000 foreign student or partners working & living illegally. 690,000 NZ SCV with over 290,000 of those as non NZ third world useless exploiting the NZ Aust trans Tasman loophole.
    Another 290,000 protection visas rorting the AAT, 195,000 so called working holiday (but only a fraction actually working in rural areas), 176,000 so called skilled & partners/ dependents, 135,000 so called regional visas and so on..

    2.3 million low life useless unskilled third world migrants on a visa pretext that no longer has any valid basis.

    90% or 2.3 million in just Sydney & Melbourne alone.

    Living in vast fetid non assimilated slums, occupying some 600,000 ex Australian dwellings, thieving some 2 million Australian jobs.

    Time to round up and deport them all.

    Their home country to pay for their roundup and exit.

    There is plenty of Virgin / Qantas and other spare airline capacity that can be chartered.
    100 flights a day x 280 third world migrants per plane = 28,000 a day – 10 weeks would see 2 million exited.

    2 million cleansed out in 10 weeks.

    They have been a long standing social & economic risk. Living in crowded unsanitary & illegal conditions.
    Few have genuine health care cover and they now pose a public hospital health care overload & bio security risk.

    Benefits to Australians.
    Australian jobs & housing (once disinfected) restored.
    Australia wages restored.
    The foreign criminal run black market and vice economy shut down.
    The corrupted foreign student education racket shut down & affordable education restored to our youth as a right.
    Public infrastructure, transport, water / dams, power & health care capacity all restored to Australian citizens first.

    And then start on the PR…

    1.9 million non Australian foreign Citizens sucking up our welfare and healthcare.
    Revoke all their PR Medicare & Centrelink benefits.
    They are foreign nationals.
    Mass screening to re assess their PR credentials, many
    have entered on false pretexts or were not vetted.
    They are on a PR conditions – which can be changed as our circumstances now require & many should be exited.

    Migrants arent a race but let’s also view it by ethnic groupings.

    The Chinese Hokou invasion.
    China has an internal passport system called Hukou. Part of the Chinese 10 year plan is to expel 104 million lowlife 1st & 2nd generation peasantry from their tier 1 cities. The ghost cities were built for them but they refused to move. Fearing rebellion the CCP & Chinese criminal syndicates then colluded to ‘export’ these low life internal illegals to foreign countries as ‘students’ or ‘’guestworkers’. Old sick misfit useless petty criminals vice workers & social credit score undesirables.
    Over 9 million have been ‘exported’.
    1.1 million or more to Australia.

    We have 1.4 million mainland born communist Chinese in Australia. 640,000 are as here as TR, 560,000 as PR and only 320,000 as Australian citizens.
    That’s 1.1 million China born non Australian foreign nationals. An entire Hukou underclass of Chinese old poor sick & useless, trafficked into Australia ($2k or
    10,000 RMB buys an Australian PR in Guangzhou, with the Chinese trafficking syndicates and the Chinese government actively colluding to provide false documents & identities to export their unwanted lowlife)
    To colonise the west or other nations and to shift that burden from China to an overseas country.
    No checks on that identity or Chinese Hukuo status of social credit score are done by Australia.
    Our borders wide open for China to dump their Chinese Hukou misfits & internal illegals into Australia, to colonise, to launder their black money into Australian property, and to run their vice, drug & criminal activities in the Australian migrant black economy.
    Once here – as a PR to suck up our Medicare & Centrelink as PR, or to live & work illegally as TR also attempting to snag a PR.

    Indians & associated Bangladeshi, Pakistani & Sri Lankan.
    Another 840,000 as non Australian citizens / again either as a PR sucking up Centrelink & Medicare or as TR working & living illegally, paying bribes to get in on every visa category they can exploit. Scraped from the slums of Mumbai, New Delhi, Dhaka & Islamabad.
    Remittances from their foreign students and migrant guestworkers the main income source for the rural ooor and slum dwellers of India, Pakistan & Bangladesh.

    South East & North Asian.
    Much the same. The TR are invariably third world lowlife & slum clearance, the rural poor & the abandoned mothers of South & North Asia, Thailand, Malaysia, Phillipines, Indonesia & Korea & Taiwan.

    Well over 500,000 as PR or TR, if female – invariably as (willingly exploited) vice workers, the males as petty criminals or black market labour rings, trafficked in by their respective criminal agent procurers.

    Middle Eastern / African / other – at least 500,000 with every visa category systemically frauded, fake sponsors, student & partner, spousal & other visa categories exploited, in both Hijrah (Islamic invasion by overwhelming the borders of the non Muslim country) and seeking a western country to suck off their welfare & healthcare. Or as a refugee & almost guaranteed PR – an unbelievable spawn of 6, 8 or more children often with multiple fathers & unassimilated- raised in migrant enclaves as haters of the western values – all living off Centrelink with remittances being sent back, as well as acting as an anchor in arranged marriage & sponsor / fraud to bring in more like them in chain migration.

    And don’t forget the spawn of the South & Central American criminal classes as a new wave of third world poor & misfits.

    Clearly we aren’t getting the best or brightest.
    Instead our immigration filters are drawing in the absolute bottom of the barrel scrapings.

    👉🏻Time to reset our migration controls.

    Expel all the TR.

    And it raises the question why do we need a PR category at all?
    Just so it’s clear.
    No PR is an Australian citizen.
    A PR is a a foreign national, often on a sole or exclusive foreign country passport, with no allegiance to Australia.

    Many like the Chinese PR have been here for a decade but still retain sole & exclusive Chinese only nationality.

    Why are they here in Australia?
    Are they the sort of people we want?

    Why are they being granted a PR with full work rights, purchase of property, Centrelink & Medicare entitlements when they are not Australian citizens?

    How many have entered with falsified documents & fake health checks done by the foreign agent procurer.

    Let’s see the Chinese social credit scores & Hukuo status of what is being allowed in.
    Let’s see onshore health checks of all current Indian, Bangla & Nepalese done by accredited Australian Doctors.

    And let’s see a 10 year waiting period before citizenship is granted to any suitable migrant.

    And during that period a $50,000 bond paid in a renewable 2 year TR visa as a ‘prospective citizen’ – with
    🔹NO Medicare or Centrelink benefits.
    🔹Mandatory health cover. Full Australian medical inspection onshore, sent back if found a community health risk.
    🔹Electronic tracking, mandatory reporting of income tax paid & activities.
    🔹No rights in any property purchase.
    🔹Only genuine skilled & above average income attainment.
    🔹Any Citizenship grant subject to a police checks, income records, taxation paid & identity validation. And then finally community approval in public review process.

    Just like other countries in their citizenship grants.

    It’s time to rethink and reset all our immigration controls.

  10. SamscoutMEMBER

    “To assist with the smooth functioning of Australia’s capital markets, the Bank has decided to broaden the range of eligible collateral for these operations to include Australian dollar securities issued by non-bank corporations with an investment grade credit rating. More details are provided in the accompanying market notice.”

    Is the RBA now bailing out the corporate bond market or other non-ADI’s?