The Reserve Bank of Australia has cut the cash rate to a new record low of 0.5 per cent as it moves to buttress the economy against a worse-than-expected hit from the coronavirus.
Pricing for the 25 basis point rate cut had advanced from an outside chance last week to a foregone conclusion by Tuesday morning, following a torrid weekend for a virus-rattled economy.
In his address following the March board meeting, RBA governor Philip Lowe said earlier forecasts that the economy had reached a “gentle turning point” were now under a cloud.
GDP growth in the March quarter is likely to be “noticeably weaker” than earlier expected.
“Prior to the outbreak, there were signs that the slowdown in the global economy that started in 2018 was coming to an end,” Dr Lowe said in his address after the bank’s March board meeting.
“It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path.”
Dr Lowe said the virus is expected to delay progress towards the RBA’s target for full employment and inflation
He said the RBA board remains prepared to ease monetary policy further.
