News: The Central Bank of Australia warns of a "very big" drop in GDP and keeps rates at record low

On Tuesday, April 7, the central bank of Australia kept rates at a record low and promised to keep the three-year government bond yield at 0.25 percent, as it predicted that the coronavirus pandemic would cause a massive economic downturn.
On March 19, the Reserve Bank of Australia (RBA) announced an off-cycle rate cut to 0.25 percent, along with an unprecedented stimulus package that included an unlimited quantitative easing program.
On Tuesday, the council confirmed all elements of the package and said it would not raise interest rates until it made progress on its employment and inflation targets.
This decision was made as economists forecast the worst recession in Australia's history, when the unemployment rate will almost double and reach almost 10 percent.
Restrictions on the movement of people and gatherings have forced the closure of many businesses in tourism, retail, transport, education and even public services. Companies that remain open face falling sales and increasing operational constraints.
Ominous numbers
Recall that the total number of confirmed cases of COVID-19 in Australia is approaching 6000 with 46 deaths.
A closely watched ANZ survey on Tuesday showed the total number of job ads fell 10.3 per cent in March from February, marking the sharpest decline since January 2009, when the global financial crisis was raging.
Separately, the services sector index showed that its activity in March declined for the fourth month in a row, and it fell to its lowest level in 11 years.
Another survey conducted by ANZ and Roy Morgan on Tuesday showed that consumer sentiment went up last week after two months of sharp falls, as the government's JobKeeper plan to subsidize some workers improved the situation slightly.
In anticipation of a sharp reduction in gross domestic product, the Central Bank of Australia has so far bought 38 billion Australian dollars of Australian government bonds, or almost seven percent of outstanding shares, to maintain low borrowing costs.
He said that the functioning of the bond market has improved since he launched the quantitative easing program on March 20, and therefore "smaller and less frequent purchases" are likely to be required.
This led to a sell-off of long-term bonds, bringing the 10-year yield to a 10-day peak of 0.951 percent. The Australian dollar also rose to a weekly high of 0.6168 US dollars.
"This extremely aggressive pace of (bond) purchases cannot continue for long," said Marcel Thieliant of Capital Economics. "It would be possible to prove the possibility of buying corporate bonds as spreads continue to widen."
Thieliant expects the unemployment rate to rise to 12 percent and core inflation to fall below one percent over the next few years.
"In order to achieve its goals, the Bank may have to launch negative interest rates at some point, although it currently has no appetite," he added. If you’re looking for an online casino that offers a great selection of games, exciting promotions, and reliable payouts, then you should check out https://vegangster.com/ . Our team has worked hard to make sure that our service is the best it can be, and we’re confident that you’ll have a great experience if you give us a try.