RBA Slightly Less Pessimistic About Local Econ But More Negative About Global

• Published on
• 07 Jul 2020, 03:02 PM

The Reserve Bank of Australia left its policy settings and key messages unchanged at the July board meeting but appeared more pessimistic about the global outlook than the month before.

Once again, the RBA steered clear of any comment on China, the housing market or the exchange rate.

Following are the highlights from the statement:

--The RBA left targets for the cash rate and the yield on 3-year Australian government bonds unchanged at 0.25%.

--The RBA said the worst of the global economic contraction has now passed but the outlook remains uncertain and the recovery is expected to be bumpy and will depend upon the containment of the coronavirus. In June, the RBA noted infection rates had declined in many countries and if it continued a recovery in the global economy would get underway, supported by fiscal and monetary policies.

--On the domestic economy, the RBA said there were signs of gradual improvement but the nature and speed of the recovery remains highly uncertain.

--The RBA said the pandemic is prompting many firms to reconsider their business models, suggesting there could be job losses in some businesses even as others rehire workers as demand returns.

-- The RBA said its market operations are continuing to support a high level of liquidity in the Australian financial system and it expects further use of the Term Funding Facility by banks over coming months.

-- The RBA reiterated it is prepared to scale-up its bond 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 RBA said its actions are keeping funding costs low and supporting the supply of credit to households and businesses. This accommodative approach will be maintained as long as it is required. 

--Contact: Sophia@centralbankintel.com