RBA announced its decision to cut interest as expected by 25 basis points, from 0.75% to 0.50% at its meeting this morning. The most important points of the interest statement are as follows:
The decision to cut interest comes to support economic growth.
This decision was a response to the outbreak of the Coronavirus.
Global uncertainty increased with the spread of the Corunavirus.
The outbreak may slow the growth of the global economy in the first half of 2020.
Slowing global growth that started in 2018 is almost over.
It is too early to determine the implications of the outbreak of the Corona Virus for the economy.
Inflation stabilizes at low levels.
Unemployment in many countries of the world is stable at low levels.
Interest rates remain stable at low levels.
There are still risks in the global financial system.
Government bond yields have stabilized at low levels in most of the world’s economies.
Business and individual borrowing rates are at their lowest historical levels.
The value of AUD has declined recently.
GDP is expected to experience some slowdown more than expected in the first quarter of the year.
Once you control the developments of the Corona virus, the economy may return to its growth pace again.
Low interest rates, recent tax cuts, and continued spending on infrastructure will be a strong supporter of economic growth.
Uncertainty about domestic demand continues to affect consumption expectations.
Unemployment rose in January to 5.3% and has settled near 5.75% since April last year.
There are several signs of slowing job growth in recent months.
Wages suffer from some weakness.
There is some stagnation in the pace of inflation growth.
Inflation is expected to stabilize between 2% and 3%.