At a policy meeting for the November session, the Reserve Bank of Australia (RBA) decided to lower interest rates to its latest low of 0.10% from 0.25%, as many expected.
In addition, the central bank also announced to increase its asset purchase program by AU $ 100 billion, which includes the purchase of government bonds lasting about 5 to 10 years over the next six months. Meanwhile, the 3-year bond yield target is set at 0.10%.
In a recent statement, the central bank indicated that it would not raise interest rates for at least three years.
Meanwhile, according to the RBA, the decision on additional stimulus measures is to support the creation of jobs and the recovery of the Australian economy from the coronavirus pandemic crisis.
In fact, the central bank also said that it was willing to do more if needed.
The combination of buying RBA bonds and lower interest rates along the yield curve will help recovery by lowering financing costs for borrowers, contributing to lower exchange rates than others and supporting asset prices and balance sheets, RBA Governor Philip Lowe said in his latest statement.
The move is also the central bank's latest effort to pull the economy out of its first recession and prevent higher unemployment.
In addition, the central bank released its latest projections on Australia's economic growth which is expected to be positive in the September quarter despite being affected by sanctions in Victoria. In the central bank scenario, economic growth is expected to be around 6% until June 2021 and 4% in 2022.
