RBA Slashes Cash Rate

RATES REDUCED: The cash rate decision for March has been announced by the RBA with a rate cut.

The RBA has reduced the cash rate to a new record low of 0.50% in response to the economic threat posed by the coronavirus outbreak and bushfire crisis.

Whilst the Reserve Bank would have been encouraged by recent economic data confirming continued house price increases and business investment, the dangers to the economy posed by the virus and fires and fears of a recession left the RBA with little option but to reduce rates.

"The coronavirus outbreak overseas is having a significant effect on the Australian economy at present, particularly in the education and travel sectors," said RBA governor Philip Lowe in his post-meeting statement.

"The uncertainty that it is creating is also likely to affect domestic spending. As a result, GDP growth in the March quarter is likely to be noticeably weaker than earlier expected."

Mr Lowe remained optimistic that the economy could rebound quickly once the outbreak was under control.

"Once the coronavirus is contained, the Australian economy is expected to return to an improving trend," he added.

Although, he said the Reserve Bank stood ready to do more if the outbreak continued to worsen.

"The board is prepared to ease monetary policy further to support the Australian economy," he concluded.

If you’d like to have a chat about what today’s news means for you and your finances, please don’t hesitate to get in touch.