RBA holds official cash rate at August meeting

Joel RobinsonAugust 3, 20200 min read

The RBA kept interest rates at a record low 0.25 per cent at its August meeting, maintaining the current policy settings.

Experts in Finder.com.au's RBA Cash Rate Survey suggest the economy is yet to "turn a corner", despite RBA governor Philip Lowe's comments after the June ABS figures that it had done exactly that.

More than half of the 26 respondents disagree with Lowe's statement, saying that the total economic impact is impossible to forecast with a second outbreak unfolding across Victoria and NSW.

Graham Cooke, insights manager at Finder, said that Australia’s economic fate rests on how well authorities can limit the spread of the virus.

“The virus situation has rapidly deteriorated since June. 

“As Melbourne enters a Stage 4 lockdown, businesses are once again bracing for restrictions and closures that will no doubt send economic shock waves across the country", Cooke added.

Rebecca Cassells of Bankwest Curtin Economics Centre said that the recent surge in infections is threatening retail recovery.

"Thousands of jobs were recovered in June, retail sales improved and business and consumer confidence was up. But virus outbreaks in Victoria and NSW have very rapidly undone this trajectory", Cassells said.

“JobKeeper and JobSeeker offer some economic certainty, but getting the virus back under control will offer more,” she said.

Patrick Coghlan, chief executive at CreditorWatch, says the holding of the interest rates is sympathetic to the balancing act the Australian economy faces.

He does suggest however that there is concern that by extending the likes of the government’s business stimulus packages, we are simply kicking the can down the road.

"Once the likes of JobKeeper, JobSeeker, Mortgage Holidays and Safe Harbour do eventually come to an end, there will be a seismic shock to the economy as companies will have to either fend for themselves or admit defeat", Coghlan says.

“With ten per cent of all businesses in Australia in danger of failing because of lack of cash, we could potentially end up seeing ten years’ worth of administration in the next six months."


Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.
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