The Morrison Government’s mind-bogglingly large support packages to get Australians through the COVID-19 (Coronavirus) shutdown have dominated headlines, and rightly so. Only months ago, the Australian economy was in relatively good shape and headed for a Budget surplus.
It’s not just the Government that has swung into action. Behind the scenes, the Reserve Bank of Australia (RBA) has also pulled out all stops to keep the economy moving.
RBA monetary policy is the yin to the Government’s fiscal policy yang. During the current crisis it’s designed to complement, and to some degree pay for Government spending which already exceeds $320 billion.
On March 19, RBA Governor Philip Lowe announced a package of monetary support policies to “support jobs, incomes and businesses”.
These policies included maintaining the cash rate at 0.25 per cent, the creation of a $90 billion funding facility to support business lending, and the purchasing of government bonds.
The prospect of low interest rates for the next few years creates opportunities and dilemmas for borrowers and investors.
As banks pass on some or all the cuts in official interest rates to their home loan customers, first home buyers are well-placed to secure a good deal. Existing homeowners might also take the opportunity to refinance.
These are undoubtedly difficult times, but the decisions you make now could put you in a good position when markets recover. So please call us to discuss your financial situation.