RBA presses for ongoing support to bolster Australian economy

30 Jun 2020

The Australian economy will require “considerable” support for a while yet, according to Deputy Governor of the Reserve Bank of Australia (RBA), Guy Debelle on Tuesday.

Debelle added that it would present a “problem” should the government bring an end to fiscal stimulus in September as initially mooted.

The country’s fiscal response to the COVID-19 pandemic is one of the largest in the world, reaching nearly 10% of GDP, Reuters reports.

The Reserve Bank of Australia cut interest rates to a record 0.25% low and launched an unlimited quantitative easing programme to help bolster the economy from the coronavirus impact.

Up to now the measures have been a success in supporting Australia’s A$2 trillion economy, although according to the deputy governor of the central bank, more support will be needed.

“If everything ceases at the end of September then yes that would be a problem,” Debelle said.

“The government’s made it very clear in recent days that they are well aware of that and they are considering what they’re going to do to address that. We’ll find out more in a few weeks’ time.”

Treasurer, Josh Frydenberg is due to announce an update on July 23 on whether changes will be made to the fiscal package, particularly in regard to prolonging the support beyond September.

Official data published on Tuesday revealed payroll jobs remained 6.4% under levels from mid-March, when the country had recorded its 100th case of coronavirus.

The rally in payroll jobs between the middle of April and the middle of this month makes up around 30% of the jobs initially lost due to the pandemic, according to the Australian Bureau of Statistics (ABS).

RBC economist Robert Thompson stated: “The pace of recovery has clearly slowed ... and further highlights the importance of supplementary wage support via the JobKeeper and JobSeeker programmes.

“The future of wage supplement programmes will be key.”

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