The Reserve Bank, which decided this week to keep the official interest rate on hold, says Australia’s financial system is resilient and that the economy will recover as soon as the virus is contained.
There are some signs that markets are working more effectively than they were a few weeks ago, says Philip Lowe, Governor of the RBA.
Australia’s extensive stimulus packages, together with the complementary measures taken by Australia’s banks, will soften the expected contraction and help ensure that the economy is well placed to recover once the health crisis restrictions are removed. “These various responses are providing considerable support to Australian households and businesses through what is a very difficult period,” says Lowe. “The Australian financial system is resilient. It is well capitalised and in a strong liquidity position, with these financial buffers available to be drawn down if required to support the economy.” Australian banks and authorised deposit-taking institutions have access to at least $90 billion in funding to help Australians, he says.