The Reserve Bank of Australia (RBA) made the decision to bring the cash rate down to an all-time low of 0.50% at today's board meeting. hui.
Interestingly, just as late as last week, many economists and market observers were confident that interest rates would be maintained at this meeting. This shows just how much the situation can change in a week – like Monday morning, the situation changed dramatically after the ASX200 lost 10% of its value and $ 44 billion was wiped out of the stock market.
Online bookmaker Sportsbet assessed the probability of a reduction of 0.25% to $ 1.20, still confirming that a reduction was in play.
This is a case where the RBA is taking rapid action in response to the evolutionary impact of the coronavirus (COVID-19) and its massive effect on world trade.
"The coronavirus has clouded the short-term outlook for the global economy and means that global growth in the first half of 2020 will be weaker than expected," said Governor Philip Lowe: Policy decision monetary.
"Before the epidemic, there were signs that the downturn in the global economy that had started in 2018 was coming to an end. It is too early to say how persistent the effects of the coronavirus will be and when the global economy will find a way to improve. Political measures have been announced in several countries, including China, which will help support growth. "
While none of us could have predicted that an international virus epidemic would occur, we now need to prepare for more volatility.
The coronavirus epidemic occurred behind the bushfires, which has the potential to push the economy even further back in the weeks and months to come.
With so much uncertainty from a global perspective – China is virtually closed to business, Japan has taken the unprecedented step of closing their schools for a month, and the sharing market sees stocks "staying at home "as Netflix thrive while people prepare to lock yourself in – we might see another drop in the cash rate over the next few months.
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