In the minutes of March 18 meeting, RBA said that Australia would likely experience a “very material contraction in economic activity, which would spread across the March and June quarters and potentially longer.”. The size of contraction would depend on the “extent of the social distancing requirements, and potential lockdowns” for containing the coronavirus. Also, there will be “significant job losses over the months ahead”. Economy is expected to recover following containment of the coronavirus, “but the timing of this was uncertain”.
At the meeting, RBA decided to roll out a package a measures of four elements. Cash rate was lowered to 0.25%. Purchase of government bonds to keep 3-year yield at 0.25%. Launched a term funding facility to support credit to businesses, and adjustment of interest rate on ES balance held by financial institutions.
