At its meeting on the 4th of August, the Board of the RBA decided to maintain current policy settings, which means there will not be any cuts to the cash rate, as some were predicting.

The cash rate remains at 0.25%, and the targeted yield for 3-year Australian Government bonds remains at 25 basis points.

The RBA says that their mid-March support package is working as expected. There are very high levels of liquidity and borrowing rates are at historic lows. As a result, the downturn is not as severe as earlier predictions and a recovery is now underway throughout most of the nation.

The Board has considered several scenarios for Australia’s economic future, and in all of them, inflation remains below 2% for the next several years—they predict between 1 and 1.5%.

However, the RBA also say that fiscal and monetary stimulus from the Government will be required for some time to ensure a recovery for the economy and labour market.