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Reserve Bank keeps Australia’s interest rates on hold at a record-low 0.25 per cent

Reserve Bank keeps Australia’s interest rates on hold at a record-low 0.25 per cent – as experts say it could be in place for years

  • The Reserve Bank of Australia has left interest rates on hold at 0.25 per cent
  • Governor Philip Lowe: unemployment would hit ‘highest level for many years’ 
  • CoreLogic said cash rate was set to stay at record low levels ‘for years to come’ 

The Reserve Bank has left interest rates on hold at 0.25 per cent – with experts predicting record-low borrowing costs for years to come as unemployment surged.

Philip Lowe, the governor of the central bank, feared there would be ‘a very large economic contraction’ in the June quarter. 

Economists are already predicting a surge in Australia’s unemployment rate to double-digit levels unseen since the Great Depression of the 1930s.

They fear coronavirus will cause the jobless level in March to double from February’s 5.1 per cent when official data is released next week, following the shutdown of pubs, clubs, cinemas and dine-in restaurants to slow down the contagion.

 

The Reserve Bank has left interest rates on hold at 0.25 per cent – with experts predicting record-low borrowing costs for years to come. Philip Lowe (pictured), the governor of the central bank, feared there would be ‘a very large economic contraction’ in the June quarter

‘The unemployment rate is expected to increase to its highest level for many years,’ Dr Lowe said.

CoreLogic’s head of research Eliza Owen said the cash rate was likely to stay at a quarter of a percentage point ‘for years to come’ without going into zero.

‘The cash rate will probably not go down any further, or into negative territory,’ she said.

The Reserve Bank of Australia’s monthly announcement for April was made only hours after the ANZ bank revealed job advertisement dived by 10.3 per cent in March, marking the sharpest fall since the global financial crisis.

Deloitte Access Economics partner Chris Richardson said one million Australians were likely to have lost their jobs in the last week of March, which would take unemployment above 12 per cent – the highest since the mid-1930s during the Great Depression.

Nonetheless, he predicted the federal government’s $130billion JobKeeper package, to provide $1,500 fortnightly wage subsidies to six million workers, would see unemployment instead peak at eight per cent.

Philip Lowe, the governor of the central bank, feared there would be 'a very large economic contraction' in the June quarter, adding 'unemployment rate is expected to increase to its highest level for many years'. Pictured is a woman outside Centrelink at Bondi Junction in Sydney's east

Philip Lowe, the governor of the central bank, feared there would be ‘a very large economic contraction’ in the June quarter, adding ‘unemployment rate is expected to increase to its highest level for many years’. Pictured is a woman outside Centrelink at Bondi Junction in Sydney’s east

An Australian Bureau of Statistics spokesman said workers receiving a JobKeeper subsidy through their employer would be classified as being employed when labour force data for March is released on April 16. 

‘Where an employer is paying an employee, regardless of whether through existing business resources or courtesy of a wage subsidy, the employees would be classified as employed,’ he told Daily Mail Australia. 

Australia’s unemployment rate hit 11.2 per cent in December 1992, which was the highest jobless level since the Great Depression, even though the technical recession had ended in mid-1991. 

The Reserve Bank announced that since March 19, it had spent $36billion buying federal, state and territory government bonds in a bid to pump money into the financial system. 

It is also providing $90billion to the banks to provide cheap small business loans. 

Economists fear coronavirus will cause the jobless level in March to double from February's 5.1 per cent when official data is released next week, following the shutdown of pubs, clubs, cinemas and dine-in restaurants to slow down the contagion

Economists fear coronavirus will cause the jobless level in March to double from February’s 5.1 per cent when official data is released next week, following the shutdown of pubs, clubs, cinemas and dine-in restaurants to slow down the contagion

Read more at DailyMail.co.uk