Sydney, Australia, Nov 3 (efe-epa).- The central bank of Australia on Tuesday reduced interest rates to 0.1 percent from 0.25, the lowest level in the history of the country, as part of a slew of measures to help recover from the recession caused by the coronavirus-induced lockdown.
It is the third time that the Reserve Bank of Australia has slashed interest rates in 2020 to stimulate the economy.
The year began with 0.75 percent interest rates. At the beginning of March, the rates were slashed to 0.50, and by the month-end to 0.25.
The Reserve Bank also announced the purchase of AU$100 billion ($70,340 million) of government bonds with maturities of about five to 10 years in the next six months.
The bank approved several measures to support job creation and the recovery of the economy from the pandemic.
“With Australia facing a period of high unemployment, the Reserve Bank is committed to doing what it can to support the creation of jobs,” Governor Philip Lowe said, announcing the bank’s monetary policy decision
“Encouragingly, the recent economic data have been a bit better than expected and the near-term outlook is better than it was three months ago.”
He said the recovery was still “expected to be bumpy and drawn out and the outlook remains dependent on successful containment of the virus.”
The bank has projected the GDP growth to be around 6 percent over the year to June 2021 and 4 percent in 2022.
The unemployment rate is expected to remain high but to peak at a little below 8 percent, rather than the 10 percent predicted previously.
At the end of 2022, the unemployment rate is forecast to be around 6 percent.
“The economic recovery is under way and positive GDP growth is now expected in the September quarter, despite the restrictions in Victoria. It will, however, take some time to reach the pre-pandemic level of output,” he said.
Lowe said that given the outlook for both employment and inflation, monetary and fiscal support would be required for some time.
“For its part, the board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range,” he said.
He said the board was not expecting to increase the cash rate for at least three years.
“The board will keep the size of the bond purchase program under review, particularly in light of the evolving outlook for jobs and inflation,” he said. EFE-EPA