Australia’s central bank maintained its interest rate and the target yield on three-year government bonds as economy experiences severe downturn after measures taken to stem the spread of coronavirus, or Covid-19.
At the monetary policy meeting on Tuesday, the Reserve Bank of Australia board kept its interest rate at a record low 0.25 percent and the targeted yield on three-year government bonds at around 0.25 percent.
Since the bank launched its asset purchase programme in March, it has purchased about A$50 billion securities.
“The Bank is prepared to scale-up these purchases again and will do whatever is necessary to ensure bond markets remain functional and to achieve the yield target for 3-year AGS,” Governor Philip Lowe said in a statement.
The RBA broadened the range of eligible collateral for the asset purchase plan to include Australian dollar securities issued by non-bank corporations with an investment grade credit rating.
The central bank said the target will remain in place until progress is being made towards the goals for full employment and inflation.
The bank said it is committed to do what it can to support jobs, incomes and businesses during this difficult period and to make sure that Australia is well placed for the expected recovery.
Policymakers observed that the Australian economy is going through a very difficult period and there is considerable uncertainty about the outlook and inflation is expected to remain below 2 percent over the next few years.
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