As the government of Australia announced plans to relax pandemic-related restrictions by July, the central bank predicted the country is facing its biggest economic contraction on record. Reserve Bank of Australia (RBA) also said it was committed to supporting jobs and incomes.
Marking the first recession in three decades, the RBA forecast the economy would shrink by 10 percent in the first half of the year. In a bid to contain the COVID-19 spread, borders are closed. Strict mobility announced by the government. This move prompted many businesses to close down.
In an emergency meeting in March, the interest rates slashed by the RBA to a record low 0.25 percent. To keep borrowing costs low for banks and consumers, the central bank also launched an unlimited quantitative easing programme.
The RBA expects annual GDP to shrink 6 percent this year despite the aggressive monetary and fiscal support. While hitting 10 percent by June, the unemployment rate expected to remain around 7.5 percent through 2021.
Before returning to modest inflation by year-end, consumer prices are expected to turn negative in the June quarter. Beyond the next few months, the central bank said the economic recovery’s speed and timing is very uncertain.
