Australia cuts rate amid growing consequences of coronavirus pandemic

US, WASHINGTON (ORDO NEWS) — The Reserve Bank of Australia (RBA) lowered interest rates for the second time this month, joining global central banks to help the economy amid the expanding effects of the coronavirus pandemic.

At an unscheduled meeting, the RBA lowered the rate to a record low of 0.25% and announced that it would not tighten its policy until it reached the targets for employment and inflation.

The RBA also set a target level of return on three-year government bonds at about 0.25%, which it plans to achieve through purchases in the secondary market starting Friday.

The announcement helped push three-year government bond yields to 0.34% from 0.589% before a decision was made, but it is still above the newly set target.

The RBA said it would also open a three-year credit line to local banks for at least 90 billion Australian dollars at a fixed rate of 0.25%. Lenders will be able to receive initial financing in the amount of up to 3% of existing loan debt.

The amount of financing will be increased if banks increase lending to businesses, especially small and medium.

In a separate statement, the Australian government said it would buy back $ 15 billion worth of mortgage and other securities over the next 12 months.

Together with the RBA loan package, this will pour into the economy about 105 billion Australian dollars.


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