Coronavirus: RBA Slashes Interest Rates To Record Low Of 0.5%
For the fourth time in a year, the Reserve Bank has slashed interest rates to a record low of 0.5 per cent as it seeks to control the economic fallout from the virus outbreak.
Interest rates had already dropped three times last year as the RBA attempted to resuscitate an already sluggish economy that was in the grip of a housing downturn and a challenging retail environment.
Following a summer of devastating bushfires, which Treasury predicts will knock off around 0.2 per cent points from Australia’s economic growth, the coronavirus outbreak threatens to cause further economic fallout.
Futures market traders, including the Organisation for Economic Cooperation and Development (OECD), had been expecting a cut, with ASX data showing trading on the exchange implied a 100 per cent chance of reduction by 0.5 per cent.
The probability of the cut had been tracking at between 10 per cent to 20 per cent last week, but on Monday it suddenly surged to 100 per cent.
Traders are also expecting the official cash rate to drop to 0.25 per cent by July this year.