Reserve Bank of Australia

  • as package had been introduced only recently, members assessed that the best course of action was to maintain the current policy settings and monitor economic and financial outcomes closely
  • the labour market was expected to have ongoing spare capacity, and inflation was expected to be below 2 per cent over the following few years
  • board would maintain its efforts to support the economy by keeping funding costs low and credit available to households and businesses
  • plan to accept corporate debt in repos would not have a material impact on the bank's risk profile
  • members agreed that the bank's policy package was working broadly as expected
  • prepared to scale up govt bond purchases again, if necessary, to achieve yield target
  • global recovery could be expected to start later in 2020, supported by both the large fiscal packages and the monetary policy response
  • board determined that it would not increase cash rate until progress made towards full employment and inflation targets

Headlines via Reuters

Full text here

More:

  • GDP in Australia's major trading partners was expected to decline significantly over the first half of 2020
  • Australian economy had been severely affected by the imposition of containment measures
  • Australian GDP was expected to contract by around 10 per cent over the first half of 2020
  • most of the contraction was expected to occur in the June quarter
  • an economic contraction of such speed and magnitude would be unprecedented in the 60-year history of Australia's quarterly national accounts
  • preliminary data for March indicated that retail sales had experienced one of the largest monthly increases in the history of the series
  • however, business liaison program suggested that retail sales had fallen in Aprill
  • household consumption was expected to contract by around 15 per cent over the first half of 2020
  • contacts in the liaison program had reported that demand for both new and established housing had fallen
  • lower incomes and confidence, as well as lower expected population growth, were expected to affect demand for new housing for an extended period
  • liaison contacts had reported that they were taking steps to preserve cash flow, including deferring non-essential investment
  • non-mining business investment was expected to decline significantly; mining investment was likely to be relatively more resilient
  • weak labour market conditions were in turn expected to result in slower wages growth; wage freezes were likely to become more common
  • unemployment rate was expected to peak at around 10 per cent in the June quarter
  • the covid-19 restrictions were expected to have a very large effect on prices in the June quarter
  • beyond 1H2020, outlook would depend on how long restrictions on economic activity were in place

Nothing much in this lot that is not already known, a decent summary of where we are at. Not much to inspire confidence on what is ahead. RBA in watching mode, they will do more if needed.