The Reserve Bank has reduced the official cash rate by 0.25 percentage points to a new low of 0.5%, with the major banks moving swiftly to pass on the cut. The move will provide further impetus to residential property markets, which are providing security and solidity as the sharemarket struggles with the impact of the coronavirus.

RBA Governor Philip Lowe says: “It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path.

“Policy measures have been announced in several countries, including China, which will help support growth. Inflation remains low almost everywhere and unemployment rates are at multi-decade lows in many countries. In most economies, including the United States, there is an expectation of further monetary stimulus over coming months. “The coronavirus outbreak overseas is having a significant effect on the Australian economy at present, particularly in the education and travel sectors. The uncertainty that it is creating is also likely to affect domestic spending.”