The Reserve Bank of Australia today announced it will keep its monetary policy unchanged. Governor Philip Lowe today announced the Bank would keep its key interest rate and three-year target return unchanged at 0.25%.
Lowe noted that the labour market is the bank's main focus, and it is due to release new forecasts next month.
The RBA is working in tandem with the government, as lowering the cost of borrowing has eased the path of major spending programs. Today’s budget is expected to boost infrastructure spending and introduce tax cuts and other measures to kick-start an economic recovery.
The RBA’s announcement said labour market conditions have improved, and that the unemployment rate forecast may be less than previously expected earlier.
The Australian dollar rose during the statement, before retreating to 0.7146 – its lowest level since Friday.
Economists expect the budget deficit to balloon to AU$ 220 billion ($158 billion USD), or 11.6% of GDP, during this fiscal year, with unemployment expected to rise from 6.8% currently to 8% by mid-2021.