RBA: Will not increase the cash rate target until inflation, employment goals are met

Following are the key headlines from the April RBA monetary policy statement (via Reuters):

Reaffirmed 0.25% target for yield on 3-year government bonds.

Global economy is experiencing a severe downturn as countries seek to contain the coronavirus.

Containment measures have reduced infection rates in a number of countries.

Board will not increase the cash rate target until inflation, employment goals are met.

If this continues, a recovery in the global economy will start later this year.

Board is committed to do what it can to support jobs, incomes and businesses during this difficult period.

Australian economy is going through a very difficult period and there is considerable uncertainty about the outlook.

Will maintain its efforts to keep funding costs low in Australia and credit available to households and businesses.

Baseline scenario, output falls by around 10% over the first half of 2020 and by around 6 per cent over the year as a whole.

This is followed by a bounce-back of 6% next year.

In various scenarios considered by the board, inflation remains below 2% over the next few years.

Australian banking system, with its strong buffers of capital and liquidity, is also helping the economy traverse this difficult period.

CPI is expected to turn negative temporarily in the June quarter, due to falls in oil prices, introduction of free child care and deferrals of various price increases.

In the baseline scenario unemployment rate peaks at around 10 per cent over the coming months and is still above 7% at the end of next year.

Further out, in the baseline scenario inflation is 1 to 1½ per cent in 2021 and gradually picks up further from there.

Stronger economic recovery is possible if there is further substantial progress in containing the coronavirus in the near term.

Reimposed outcomes would be even more challenging than those in the baseline.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News

Editors’ Picks

EUR/USD moves closer to 1.1100 amid upbeat market mood

EUR/USD is trading well above 1.1050, hitting new 8-week highs. US data was mixed with a ray of light coming from continuing claims. Hopes about the EU Fund and reopenings trump Sino-American relations.


AUD/USD retreats ahead of the close as US equities turn red

After spending most of the day within positive levels, US indexes turned south ahead of the close, dragging the Aussie alongside. AUD/USD still up for the day in the 0.6630 price zone.


Goldman Sachs puts Bitcoin on par with Gold

One of the world's largest investment banks, Goldman Sachs, announced a conference for its clients entitled “Implications of Current Inflation, Gold and Bitcoin Policies”

Read more

Gold: Limited gains below the $1730/oz level for XAU/USD

After bouncing from the 1690/1700 price zone XAU/USD is stalling below the 1730 resistance and the 50 SMA on the four chart. The picture is mixed as it seems the metal is challenging a tough resistance near the 1730 level.

Gold News

WTI oil prices rally on gasoline demand and hopes of output cuts’ extension

WTI crude oil prices have appreciated more than 5% on Thursday to reach $34 and approach two-month highs. Investors' optimism about an increase of gasoline demand and speculation of an OPEC+ deal to extend output cuts are driving crude prices higher.

Oil News