The RBA has left rates on hold at 0.25 per cent despite speculation the deteriorating situation in Victoria might force a cut to zero.
“As Australians deal with the coronavirus, the economy is being supported by the substantial, coordinated and unprecedented easing of fiscal and monetary policy,” said RBA governor Philip Lowe. “The Australian [government’s] recent announcement that various income support measures will be extended is a welcome development and will support aggregate demand.
“It is likely that fiscal and monetary stimulus will be required for some time given the outlook for the economy and the labour market.”
The decision comes as the Victorian government moves to reimpose lockdowns, threatening the retail recovery and clouding Treasury’s predictions for the economy.
“Thousands of jobs were recovered in June, retail sales improved and business and consumer confidence was up,” said Rebecca Cassells, deputy director of Bankwest Curtin Economics Centre. “But virus outbreaks in Victoria and NSW have very rapidly undone this trajectory. JobKeeper and JobSeeker offer some economic certainty, but getting the virus back under control will offer more.”
