The Federal Reserve Bank of Australia has kept the cash interest rate and three year bond rate target at 0.25% during its June meeting.
While the talk before the RBA’s meeting today was that the rate had potential to enter negative territory, it was deemed best for the economy to maintain the 0.25% rate that was revised in March during the initial hit of the Covid-19 pandemic.
“Notwithstanding these developments, it is possible that the depth of the downturn will be less than earlier expected,” said a statement from RBA Governor, Philip Lowe.
“The rate of new infections has declined significantly and some restrictions have been eased earlier than was previously thought likely. And there are signs that hours worked stabilised in early May, after the earlier very sharp decline. There has also been a pick-up in some forms of consumer spending.
“However, the outlook, including the nature and speed of the expected recovery, remains highly uncertain and the pandemic is likely to have long-lasting effects on the economy.”
Governor Lowe added that the official interest rates would not lift until there was a marked change in the national unemployment rate.
The Australian dollar remained at the higher end of $0.67/$ after hitting $0.68 overnight amid the social crisis currently dominating American headlines, in addition to Covid-19, which continues to see widespread infection numbers throughout the USA, which has led to major cities being in lockdown over recent months.