Job creation, Economic Recovery and Covid19 containment are the Australian Government’s top priorities.
Global Economy – The global economy has been recovering from the initial virus outbreaks, with the recovery most advanced in China. Recent virus outbreaks add more downside risk to the outlook, particularly in Europe & USA.
Australian Economic Recovery – The latest economic figures and near-term outlook are both better than expected. However, the RBA is not expecting smooth sailing until the virus is contained. In Australia, economic recovery is underway. Despite the severe restrictions in Victoria, positive GDP growth is expected in the Sept quarter. GDP growth is expected to be around 6% to June 2021 and 4% in 2022.
Interest Rates – the cash rate reduced to 0.1%
Employment – Australian’s are facing a period of high unemployment. The unemployment rate is expected to remain high, but to peak at less than 8%. The unemployment rate is forecast to be around 6% by the end of 2022. Subdued increases in wages and prices over the coming years will be the result of high unemployment.
How do the Reserve Bank come to their decisions on Interest Rates?
The Board of the RBA considered the outlook for the global economy, bond yields, the Australian economy, the Australian labour market, housing market & inflation.
Philip Lowe, Governor of The Reserve Bank, explains everything here in his economic update
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