RBA makes rate decision

The RBA has left rates on hold at 0.25 per cent.

“The substantial, coordinated and unprecedented easing of fiscal and monetary policy in Australia is helping the economy through this difficult period,” said RBA governor Philip Lowe. “It is likely that this fiscal and monetary support will be required for some time.”

Last week, governor Lowe warned that monetary policy could no longer be the main tool for managing the economy in the foreseeable future.

“There’s a limit to what we can do,” governor Lowe told the Senate select committee on COVID-19. “Going forward, fiscal policy will have to play a more significant role in managing the economic cycle than it has in the past.

“For the past 20 years, monetary policy has been the main swing instrument… In the next little while, there’s not going to be very much scope to use monetary policy in that way and so I think fiscal policy will have to be used.”