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RBA Minutes: Risks to Recovery Skewed to Downside as July Meeting Had No Discussion about Impacts of Melbourne’s Lockdown

The minutes for RBA’s July meeting affirmed that policymakers should leave the current monetary measures steady for a prolonged period of time. Policymakers at the July meeting did not discuss about the surge in new coronavirus cases in Melbourne and potential economic impacts of the renewed lockdown measures. We expect risks to economic growth is skewed to the downside.

The meeting affirmed the policy package announced in March, which includes a target for the cash rate of 0.25%; a target of 0.25% for the yield on 3-year Australian Government bonds; the Term Funding Facility to support credit to businesses, particularly small and medium-sized businesses; and an interest rate of 10 bps on Exchange Settlement balances held by financial institutions at RBA. While the policy rate has been staying at record low, policymakers judged that negative interest rates remain “extraordinarily u