Australian PM Morrison: Fiscal stimulus measures Worth A$17.7Bln
|Australian PM Morrison: Fiscal stimulus measures Worth A$17.7Bln to help the economy from the coronavirus.
Key notes
- Australian PM Morrison: Full Package over time worth 1.2% of GDP.
- Says package over this financial year and next two, worth $22.9 bln.
- Says fiscal stimulus measures worth A$17.6 bln
- Australia Treasurer Frydenberg says A$11 bln of stimulus to be dispersed before end of June.
- Treasurer Frydenberg said this morning that it will be including one-off cash payments to pensioners and the unemployed, wage subsidies for small and medium-sized businesses and instant tax deductions for equipment investment for small business.
- Frydenberg says important to align fiscal and monetary policy says stimulus announced could add up to 1.5% to GDP (in Q2) too early to judge the full impact of the COVID-19 outbreak on the economy. Also says he spoke with RBA Governor Lowe today.
FX implications
The Government has indicated the response will be "scalable", leaving it open to delivering a second stimulus package, as the Rudd Government did during the global financial crisis. Overnight, Australian 3-year government bond yields rose from 0.37% to 0.45%, 10-year yields from 0.66% to 0.78%. "Markets are pricing around 100% chance of a 25bp cut at the next RBA meeting on 7 April, and a terminal rate of 0.19% (RBA cash rate currently at 0.50%)," analysts a Westpac explained. AUD/USD is likely to feel pressures leading into the RBA and questions of QE will continue to weigh on the Aussie.
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