RBA rules out negative interest rates but how about zero?

Charbel Kadib reports “Negative interest rates out of the question: RBA” for Mortgage Business:

… the central bank ruled out further cuts to the cash rate as a means to curbing the economic impact of the outbreak.

“Members also agreed that the cash rate was now at its effective lower bound,” the RBA stated.

“Members had no appetite for negative interest rates in Australia.”

Interesting that they didn’t specifically mention a zero interest rate though they do seem to consider that the cash rate is at its effective lower bound. To get to negative rates, the RBA would need to cut by 0.5% whereas they typically cut 0.25% at a time. However, they’re definitely implying that there won’t be any more cuts.

RBA cuts rates to a record low of 0.25%

Business reporter Nassim Khadem reports for ABC News with “RBA slashes interest rates to 0.25pc in emergency cut amid coronavirus pandemic”.

The Reserve Bank has cut interest rates to a record low 0.25 per cent and announced extraordinary measures to help prevent a coronavirus-driven recession.

The RBA will buy Australian government bonds as part of its first-ever quantitative easing program, and provide a three-year funding facility to provide cheap loans for Australian banks.

Wow -the RBA announced the lowest rate Australians have ever seen in a special meeting (they normally meet at the beginning of the month to make an interest rate decision).

Reserve Bank governor Philip Lowe said the bank would hold the cash rate at 0.25 per cent "until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2-3 per cent target band".

Dr Lowe said the cash rate could be at this level for some years as it was expecting significant job losses.