The Reserve Bank of Australia (RBA) has cut the cash rate to a record low of 0.25% following an emergency meeting due to the impact the coronavirus is having on the economy.
RBA Governor Philip Lowe said in a statement the move was due to the virus causing “major disruptions to economic activity across the world”.
“This is likely to remain the case for some time yet as efforts continue to contain the virus,” said Governor Lowe.
Governor Lowe added the cash rate cut would help support jobs, incomes and businesses so that when the health crisis recedes, the country will be well placed to recover.
“The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3% target band,” said Governor Lowe.
Hasn’t the RBA already cut the cash rate this month?
That’s right. And ordinarily, the RBA board only meets on the first Tuesday of every month. But as we’re all well aware, these aren’t ordinary times so an emergency RBA Board meeting was called.
The RBA last held its regular meeting on March 3 and cut rates to 0.5% because it believed the coronavirus outbreak was going to hit the economy hard.
However, over the past fortnight, global financial markets have been in freefall as countries all around world reel from the economic fallout of the COVID-19 pandemic.
Want to know what this rate cut means for your home loan?
It’s worth noting that lenders don’t automatically reduce your monthly repayments when they drop interest rates.
With this being the second RBA cash rate cut this month – and the fifth since June 2019 – if you need some extra financial breathing space each month due to the coronavirus outbreak then please get in touch.
We’re ready to work through your options with you, whether that be asking your lender to drop your monthly repayments, discussing budgeting tools, refinancing, or seeking hardship arrangements.
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