Reserve Bank Governor Philip Lowe said the record low interest rate will be maintained for several years. The Reserve Bank of Australia has lowered the benchmark interest rate to 0.25%, purchased more than A$50 billion of state government bonds, and expanded the A$90 billion line of credit to commercial banks to lend to small and medium enterprises. The government’s debt has reached a record A$680.4 billion due to a sharp tax cut and additional government spending to help support the economy.
Lowe said that the pressure of deflation and the possible substantial reduction in economic activity mean that interest rates will remain low for a period of time. “I think we may maintain the current interest rate for several years. Our world will live in the shadow of viruses, and everyone will be more risk averse.”
Lowe said he hopes the Australian dollar can go lower, which can help economic development. “I want the Australian dollar to go down. I hope the unemployment rate will be lower and inflation will be higher.” However, the governor said that the performance of the Australian economy has been better than he expected. Earlier this year, Lowe believed that as the unemployment rate increased, working hours would also be reduced by 20%, but now he believes that working hours may only be reduced by 10%.
