RBA cut cash rate by -25bps to 0.50% in an act to “support the economy as it responds to the global coronavirus outbreak.” It noted that global growth in H1 will be “lower than earlier expected” due to the coronavirus and it’s “too early to tell how persistent the effects” will be.
For Australian economy, the outbreak overseas is “having a significant effect”, particularly in “education and travel sectors”. The uncertainty is “likely to affect domestic spending too”. Q1 GDP is “likely to be noticeably weaker than earlier expected”. Though, once the coronavirus is contained, Australian economy is “expected to return to an improving trend”.
The outbreak is expected to “delay progress” towards full employment and inflation target. RBA maintains easing bias and “the Board is prepared to ease monetary policy further to support the Australian economy.”
