The Reserve Bank has cut interest rates to a new record low of 0.1 per cent in a bid to help the Australian economy out of the COVID recession.
And in a huge win for homeowners, the RBA says it is not expecting to lift the cash rate for three years.
Today’s cut is the third time rates have been slashed this year.
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If passed on in full by the banks, it will save those on the average mortgage of $400,000 around $33 a month.
“With Australia facing a period of high unemployment, the Reserve Bank is committed to doing what it can to support the creation of jobs,” RBA Governor Philip Lowe said in a statement.
“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.
“Even so, the recovery is still expected to be bumpy and drawn out and the outlook remains dependent on successful containment of the virus.”
The RBA says it expects the unemployment rate to remain high and the inflation rate to stay low for some time and won’t look at raising rates again until those numbers improve.
“Given the outlook, the Board is not expecting to increase the cash rate for at least three years.”
But it has also given an optimistic outlook about the recovery.
“In Australia, 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.”