2020.03.1903:51:00UTC+00RBA Cuts Rates; To Buy Government Bonds

Reserve Bank of Australia decided to lower its key interest rates further to a record low and also to purchase government bonds, as the spread of covid-19 disrupts economic activity.

At the meeting on Thursday, the Reserve Bank Board headed by Philip Lowe, decided to reduce the cash rate by 25 basis points to 0.25 percent.

The bank will purchase government bonds in the secondary market and keep the yield on 3-year bonds at around 0.25 percent.

In order to support credit supply to small and medium-sized businesses, the RBA will provide a three-year funding facility to authorized deposit-taking institutions at a fixed rate of 0.25 percent.

Further, exchange settlement balances at the Reserve Bank will be remunerated at 10 basis points, rather than zero.

The bank will also continue its one-month and three-month repo operations in its daily market operations until further notice. In addition, the RBA will conduct longer-term repo operations of six-month maturity or longer at least weekly, as long as market conditions warrant.