The Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points to a new record low of 0.25% – the lowest level governor Philip Lowe has previously stated the central bank will go.
The RBA held an emergency board meeting today in response to the economic crisis brought on the the coronavirus, with Australia expecting to move into recession for the first time in 29 years. The bank will also begin quantitative easing for the first time, buying government bonds to push additional cash into the financial system, also lowering market rates in the longer term in the process.
The RBA will offer a three-year funding facility worth at least $90 billion to Australian banks at 0.25% interest, with a focus on them using the funds to support lending to small and medium-sized businesses. The retail banks will be able to borrow up to 3% of their existing outstanding credit.