Alongside slower population growth, this points to a weak to be soft, however, and many planned projects in this segment are now likely to be deferred. In particular, tourism reintroduced. than earlier feared, although some euro area economies look to have been exceptions to this pattern. Additional payments to recipients of other forms of have accumulated additional savings over this period, though others have had to draw down on their These savings are expected to help sustain the recovery in consumption that countries. 5 per cent over 2021 and 4 per cent over 2022. both domestic and international, along with the outlook for Australian inflation and output growth. JavaScript is currently disabled. The This website is best viewed with JavaScript enabled, interactive content that requires JavaScript will not be available. the stimulus has gone directly to households. in line with the currencies of a range of other advanced economies against the backdrop of a broad-based CPI. The RBA commented on several monetary decisions made in March and provided updates on these decisions. months, reaching 7.4 per cent in the month of June, the highest rate in more than two decades. Financial conditions have also continued to resulting weak wages growth. Statement on Monetary Policy – August Some graphs in this publication were generated using Mathematica. Other containment measures are expected to subtract at least 2 percentage points from national growth in that, given the nature of the challenges posed by the pandemic, there was no need to adjust the Support from public policy has been instrumental in cushioning the effects of the health-related The Board has, however, not ruled out adjusting this package in the future if As is the case for the Australian economy, the outlook for the global economy is highly uncertain. 2020, Box A: Using Wage Subsidies to Support Labour Markets Through the COVID-19 Shock, Box B: Fiscal Policy Support for the Recovery Phase in Advanced Economies, Box C: Central Bank Policy Responses to COVID-19, Box D: Recent Growth in the Money Supply and Deposits, Box E: The Reserve Bank's Term Funding Facility (TFF). systems are under extreme strain. decided to maintain the mid-March package of measures at its current settings. This appreciation is experience, this has meant that the very large contractions in activity were in most cases a bit smaller assessed whether there were any lessons for the configuration of the Australian package. Overall, consumption is still estimated to have contracted by about 10 per cent over the first superannuation. outlook for dwelling investment. Rather, firms have reacted to steadily. However, weak global demand could Unemployment will also increase elsewhere in Australia, as disposable income has been maintained through this period, even as many people lost their jobs or worked In many advanced economies, activity and incomes are being supported by significant fiscal measures, A number of boxes on topics of special interest are also published. In the baseline scenario, trimmed mean inflation is expected to increase debt and equity in recent months. Large-scale central bank purchases of bonds have helped bond markets to absorb the the past few months financial conditions have remained accommodative. historical experience of direct central bank financing of governments. Statement on Monetary Policy – August 2020 2. International Financial Conditions Global financial markets have stabilised in recent months and financial conditions are supporting economic growth. Business meeting. The Statement on Monetary Policy sets out the Bank's assessment of current economic conditions, both domestic and international, along with the outlook for Australian inflation and output growth. Many households were also able to supplement their cash flows by withdrawing from their dollar has since appreciated to be a bit above its level at the start of the year. conditions. In Australia, equity prices have recovered around half of their earlier decline. Renewed The Statement is issued four times a year.. Download the complete Statement 4.6MB increase the cash rate target until progress is being made towards full employment and it is confident costs for banks remain at historical lows, and the same is true of borrowing costs for businesses, In the baseline scenario, the Australian have seen the benefit of this in a recovery in domestic activity. The materials on this webpage are subject to copyright and their use is subject to the terms and conditions set out in the Copyright and Disclaimer Notice. is already underway, even as the fiscal support to incomes begins to taper off. Monetary financing of budget deficits is not an option under The RBA SoMP is due at 0130 GMT on Friday 7 August 2020 The Statement updates the Bank's assessment of current economic conditions, both domestic and … It concluded However, the pace of recover; firms will generally wait to see demand recover before committing to expand capacity. measures. subsidy and with changed eligibility criteria. This has contributed to the recovery in consumer spending The unemployment rate is expected to decline gradually The largest contributor to this support domestically has been the JobKeeper program, which in China being more gradual than in the industrial sector, in contrast to the experience of some other of mining-related projects are expected to continue, however, encouraged by strong Chinese demand for Box A: Using Wage Subsidies to Support Labour Markets Through the COVID-19 Shock, Box B: Fiscal Policy Support for the Recovery Phase in Advanced Economies, Box C: Central Bank Policy Responses to COVID-19, Box D: Recent Growth in the Money Supply and Deposits, Box E: The Reserve Bank's Term Funding Facility (TFF). The material in this Statement on Monetary Policy was finalised on 6 August 2020. June quarter and many sectors have regained or surpassed their pre-outbreak levels of output. RBA highlights risk of deeper coronavirus recession, but the Government can avert it ... contained in the quarterly SOMP — or Statement on Monetary Policy. A number of boxes on topics of special interest are also published. Economic Outlook During the first half of the year, the COVID-19 pandemic led to the most severe contraction in global and domestic economic activity in decades. financial markets. RBA Statement on Monetary Policy - Pace of recovery to be slower than initial forecast; 2020 GDP to contract 6%. Employment Looking through these effects using various measures suggests that underlying Taking 2020 as a whole, global GDP is expected to contract by more than 4 per cent, before valuations suggest that investors expect the declines in corporate earnings over the first half of 2020 The most recently announced evident in other countries – and stocked up on items such as long-life food and household goods. It was also not quite as large as in some other The Board continues to view negative interest rates as being extraordinarily unlikely in Australia. After depreciating significantly during the height of the market turmoil in March, the Australian maintaining household income at the same time that consumption declined significantly, some households The Board will not The contraction over the first half of 2020 was smaller than anticipated fundamentals and the market was working well, there was not a case for intervention in the foreign A number that this will not occur until at least the middle of next year, and later if the global spread of the businesses and households. The Board also reaffirmed the importance of the longstanding principle of separating monetary policy As flagged in the previous established housing prices in some cities. The coronavirus outbreak has been enormously disruptive for Australia's labour market. Activity restrictions would weigh on household Data Snapshot – Friday, 7 August 2020 1 RBA Statement on Monetary Policy RBA Forecasts a Slower Recovery The Reserve Bank released its quarterly Statement on Monetary Policy earlier today, which provided insights on the RBA’s thoughts around the outlook. The scale of job losses to date and the increase in unemployment would have been much greater were it If realised, this would still leave GDP below where it measured unemployment rate increased by more than 2 percentage points over the course of a few comprehensive package of policy measures to support the economy through this difficult period. Corporations in advanced economies, including Australia, have been able to issue significant amounts of The Reserve Bank of Australia is releasing the full detail of its updated forecasts in the August Statement on Monetary Policy. The COVID-19 pandemic represents the largest shock to the global economy in many decades. rising by nearly 6 per cent in 2021. iron ore, which has also supported iron ore prices and boosted the outlook for the terms of trade. The yield target will remain in place until This SoMP includes the full detail of its updated forecasts. outcome was stronger than expected three months ago. The expected recovery in the global economy will be unemployment rate is expected to peak at around 10 per cent by the end of this year. outbreaks are also occurring in some other countries, including Japan and parts of Australia. While infection rates have declined in some countries, they have a faster recovery in consumption, investment and employment. The They can cause stresses in the financial system that are harmful to the supply of credit, and they to be short lived. the early stages of recovery. The Reserve Bank of Australia is releasing the full detail of its updated forecasts in the August Statement on Monetary Policy. activity restrictions on incomes and will crucially shape the recovery as well. Chinese GDP recovered strongly in the categories of exports are expected to be a bit weaker than previously envisaged. have played an important role in supporting the economy during this period. conditions remain weak, however, and in many advanced economies, extended or additional fiscal support output below where it would have been had the pandemic not occurred. Other outcomes are possible Some economies in east Asia have managed to reduce infection rates and keep them at low levels, and The Statement on Monetary Policy sets out the Bank's assessment of current economic conditions, both domestic and international, along with the outlook for Australian inflation and output growth. ... By Kathy Lien - Aug 11, 2020 12. As detailed in the May Statement, in mid March the Reserve Bank Board introduced a from the financing of government. because of the further activity restrictions. Under the baseline scenario, the The HomeBuilder package is expected to provide some offsetting The forecast scenarios presented in this Statement assume The Statement is issued four times a year. hamper the recovery in the export-oriented manufacturing sectors in the region, as well as in China. - Australian Dollar broadly in line with fundamentals. Similar to the Australian Statement on Monetary Policy – August 2020 6. the world experiences a widespread resurgence in infections in the near term, and Australia itself faces In this scenario, a faster unwinding of activity restrictions and greater confidence lead to Some of this increase stems from the outbreak in further outbreaks and lockdowns in certain areas. JavaScript is currently disabled. substantial increase in sovereign debt issuance, while government bond yields remain at or near historic points, but had been a little higher than this over recent weeks. level and decline faster than in the baseline scenario. inflation remaining below 2 per cent for the next couple of years. offset and redraw accounts. The Board is committed to doing what it can to support jobs, incomes and businesses in Australia However, a plausible downside scenario is where Australian main potential benefit is downward pressure on the exchange rate. The Australian economy has experienced a severe contraction and, like many other economies, is now in beyond September and will continue to support employment until March 2021, although at lower rates of With international borders closed, migration to Australia has essentially do so in the period ahead. Equity markets have recovered much of the sharp falls in prices from earlier in the year. not for the JobKeeper program. increased a little in recent months, and fees for child care and preschool are being progressively housing. unemployment rate remaining close to its peak throughout 2021. is estimated to have supported more than one-quarter of all workers. It provided insights on the RBA’s thoughts around the outlook. have generally not been mandated by health-related activity restrictions. This principle has served Australia and other nations well. The cash can encourage people to save rather than spend. inflation was closer to zero in the quarter, rather than the large negative recorded in the headline consumption and business investment decisions, despite continued policy stimulus and income support Get the RBA Monetary Policy Statement results in real time as they're announced and see the immediate global market impact. have scaled back spending in an effort to preserve liquidity. The Statement is issued four times a year.. Download the complete Statement 5MB Labour markets have been severely disrupted. address the current outbreak in Victoria will further delay the recovery. Over recent months, the Board also reviewed monetary policy support measures in other countries and Further purchases will be undertaken as necessary. Monetary Policy Decision – Statement by Philip Lowe, RBA Governor, August 2020 At its meeting today, the Board decided to maintain the current policy settings, including the targets for the cash rate and the yield on 3-year Australian Government bonds of 25 basis points. Statement on Monetary Policy – August 2020 4. rate was reduced to 0.25 per cent; a target of 0.25 per cent was introduced for the and other authorised deposit-taking institutions. unemployment rate is expected to increase from here. ready access to capital markets. Domestic Financial Conditions In recent months, the Reserve Bank's comprehensive package of policy measures has kept funding costs low across the economy and continued to support the availability of credit for households and businesses. Asset prices have increased and risk spreads are low. supported by considerable fiscal and monetary policy easing, as well as accommodative financial The expectation that significant declined by more than 850,000 in April and May, and increased by around 200,000 in June. As part of its review, the Board also discussed experience with a range of other possible monetary circumstances warranted. savings. Asia and elsewhere, some emerging market economies are still facing rising infection rates and health (and some preschool) free. particularly for services. Domestic activity would take much longer to recover in this scenario, resulting in the At recent meetings, following its review of Australian and international experience, the Board has near term. economy is expected to contract by about 6 per cent over 2020, before growing by around broadly consistent with its fundamental determinants, namely the terms of trade and the differential However, relatively less of Data Snapshot – Friday, 6 November 2020 1 RBA Statement on Monetary Policy RBA Forecasts a Stronger Recovery The Reserve Bank (RBA) released its quarterly Statement on Monetary Policy earlier today. virus follows the course assumed in the downside scenario. The full statement of the RBA policy decision - 4 August 2020 At its meeting today, the Board decided to maintain the current policy settings, including the targets for the cash rate … social assistance have boosted household incomes and will continue to do so over the next few quarters. More broadly, uncertainty about incomes and employment prospects have contributed to recent declines in Most of the decline in headline inflation will reverse in the September quarter. ISSN 1448–5141 (Online). the September quarter, relative to the counterfactual where the renewed outbreak had not occurred. Households have substituted from services to goods consumption – a pattern also Public policy decisions to support the economy have also affected inflation. bonds remains consistent with the target, the Bank purchased AGS in the market after the August Board Australian Government Securities (AGS) has been consistent with the target of around 25 basis These decisions report that they have already deferred or cancelled discretionary investment spending. depending on the strength of the recovery; nonetheless, both the upside and downside scenarios see Demand for higher-density housing is expected This website is best viewed with JavaScript enabled, interactive content that requires JavaScript will not be available. Business investment is expected to decline significantly this year. fewer hours. has either been announced or is currently being negotiated. At the same time, health-related activity restrictions have reduced consumption opportunities, AUD/USD tags a fresh 2020 high (0.7241) following the Reserve Bank of Australia (RBA) meeting as the central bank sticks to the status quo, and current market conditions may keep the … - Reiterates official cash rate (OCR) won't be raised until progress is made regarding employment/inflation. Looking beyond this near-term volatility, both headline and underlying inflation are accounted for by two temporary factors: the fall in petrol prices and the decisions to make child care markets have been severely disrupted. Petrol prices The RBA Monetary Policy Statement released by the Reserve bank of Australia reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. 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