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Reserve Bank decides cash rate for September

Adrian Flores
Adrian Flores
01 September 2020 1 minute readShare

The Reserve Bank of Australia has made its decision on whether to keep the cash rate at a record low of 0.25 of a percentage point for September.

In line with economist expectations, the RBA has kept the cash rate on hold at 0.25 of a percentage point. All 40 experts featured on the Finder website predicted the hold decision.

The decision comes as RBA governor Philip Lowe hinted that the historically low rate will remain that way for a number of years until progress is made towards full employment.

AMP Capital chief economist Shane Oliver said the RBA views the March monetary easing package as continuing to help the economy and the main action now being in fiscal policy.

“There is a significant chance it may cut the cash rate to 0.1 [of a percentage point] and it may do more aggressive quantitative easing, but that would not be for several months. And it remains ‘extraordinarily unlikely’ to cut the cash rate below zero,” Mr Oliver said.

“The next interest rate move of significance is likely to be a hike, but with high unemployment and underemployment, lots of spare capacity in the economy and underlying inflation way below target, this is at least three years away.”

St.George Bank senior economist Janu Chan said the RBA is unlikely to move rates any time soon while the unemployment rate remains elevated and spare capacity remains in the economy.

“If there was a risk of shifting its monetary policy stance, it would be towards greater easing. However, the RBA appears reluctant to deploy additional policy measures. Onus has been placed on the government to provide additional support,” Ms Chan said.

Reserve Bank decides cash rate for September
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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