Australia lowered its prime rate to an unprecedented low in history
Australia lowered its prime rate to 0.1% for the first time in history, in an attempt to lift its economy out of a recession caused by the epidemic of acute respiratory infections COVID-19.
|The restaurant in Sydney, Australia, closed. (Photo: THX / TTXVN)|
Australia’s prime rate was lowered to 0.1% for the first time in history, in an attempt to lift the economy out of the recession caused by the epidemic of acute respiratory infections COVID-19.
On November 3, Reserve Bank of Australia (RBA – central bank) announced the aforementioned decision after the Board meeting. This is the third time Australia has cut interest rates this year.
In January, when the COVID-19 epidemic began to break out, the RBA had dropped 0.25 percentage point from the base rate it had maintained for many months before. By March, the RBA continued to cut another 0.25 percentage points, bringing interest rates to a record low of 0.25% and maintained until November 3.
Statement after the board meeting, RBA Governor Philip Lowe said the rate cut was aimed at providing credit to more Australians. He hopes the new decision will support job creation and help the Australian economy soon recovery from pandemic.
Mr Lowe said Australia is facing the highest unemployment rate ever and the RBA is committed to doing what it can to support job creation.
The RBA’s move is the biggest change in monetary policy that has maintained for 27 years in Australia. It is expected that the 0.1% interest rate will be maintained for at least the next three years.
Expert Graham Cooke, director of the Insights Institute, stressed that it was the first time since 2011 that the central bank of Australia had cut interest rates so deeply, despite some skepticism from experts about the effectiveness of measures to further monetary stimulus.
He analyzed the RBA to consider other important factors besides the basic interest rate lowering, such as the strength of the Australian dollar and the possibility that the local Victorian economy has been devastated by the epidemic. COVID-19 outbreak has caused statewide blockade for more than four months, will soon recover after being able relaxation restrictions and resume business operations.
However, Australian Treasury Secretary Josh Frydenberg quickly welcomed the RBA’s decision. Mr. Frydenberg said that this measure will help households increase spending, create jobs and thereby boost the national economy out of recession.
Previously, on October 20, the RBA announced that it would change the method of assessing macro-monetary policy decisions based on the actual situation, instead of based on inflation forecasts, in order to achieve high efficiency. most of the target to support the economy./.