Central bankers around the globe are facing growing pressure to increase monetary stimulus to help the sputtering recovery and the RBA is no exception.

The central bank has used easing policies to great effect since the onset of COVID, and after their September meeting, Phillip Lowe said that the bank will continue to investigate how further monetary measures could support Australia’s economic recovery.

At that meeting, the RBA announced it would add an extra $57 billion to its balance sheet by boosting the supply of low-cost loans to banks using its term funding facility. This facility offers banks approximately $200 billion in funding at a fixed rate of 0.25% for three years.

But some are predicting that this is just a prelude to further easing to come. Despite the RBA’s insistence in the past that they would not reduce the cash rate any further, some are still predicting a cut to just 0.1% and I can’t help but agree with that. I believe a further reduction is still on the cards, provided that the RBA can get some sort of assurance from the Big 4 banks that the cut would be passed on in full. There’s no point in reducing the rate by 0.15% only to have the banks absorbing it in full, for their profit.
The Global Pandemic is something that brought about a massive economic shock and the RBA is no doubt constantly monitoring the actions of the central banks across the world and revising strategy where required.