Statement by Philip Lowe, Governor: Monetary Policy Decision - June 2020 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2020-06-02

Media Release
Statement by Philip Lowe, Governor: Monetary Policy Decision
2 June 2020
At its meeting today, the Board decided to maintain the current policy settings, including the targets
for the cash rate and the yield on 3-year Australian Government bonds of 25 basis points.
The global economy is experiencing a severe downturn as countries seek to contain the coronavirus. Many
people have lost their jobs and there has been a sharp rise in unemployment. Over the past month,
infection rates have declined in many countries and there has been some easing of restrictions on
activity. If this continues, a recovery in the global economy will get under way, supported by both the
large fiscal packages and the significant easing in monetary policies.
Globally, conditions in financial markets have continued to improve, although conditions in some
markets remain fragile. Volatility has declined and credit markets have progressively opened to more
firms. Bond rates remain at historically low levels.
In Australia, the government bond markets are operating effectively and the yield on 3-year Australian
Government Securities (AGS) is at the target of around 25 basis points. Given these developments,
the Bank has purchased government bonds on only one occasion since the previous Board meeting, with
total purchases to date of around $50 billion. The Bank is prepared to scale-up its bond purchases
again and will do whatever is necessary to ensure bond markets remain functional and to achieve the
yield target for 3-year AGS. The target will remain in place until progress is being made towards the
goals for full employment and inflation.
The Bank's market operations are continuing to support a high level of liquidity in the Australian
financial system. Authorised deposit-taking institutions are making use of the Term Funding Facility,
with total drawings to date of around $6 billion. Further use of this facility is expected over
coming months.
The Australian economy is going through a very difficult period and is experiencing the biggest
economic contraction since the 1930s. In April, total hours worked declined by an unprecedented
9 per cent and more than 600,000 people lost their jobs, with many more people working
zero hours. Household spending weakened very considerably and investment plans are being deferred or
cancelled.
Notwithstanding these developments, it is possible that the depth of the downturn will be less than
earlier expected. The rate of new infections has declined significantly and some restrictions have been
eased earlier than was previously thought likely. And there are signs that hours worked stabilised in
early May, after the earlier very sharp decline. There has also been a pick-up in some forms of consumer
However, the outlook, including the nature and speed of the expected recovery, remains highly uncertain
and the pandemic is likely to have long-lasting effects on the economy. In the period immediately ahead,
much will depend on the confidence that people and businesses have about the health situation and their
own finances.
The substantial, coordinated and unprecedented easing of fiscal and monetary policy in Australia is
helping the economy through this difficult period. It is likely that this fiscal and monetary support
will be required for some time.
The Board is committed to do what it can to support jobs, incomes and businesses and to make sure that
Australia is well placed for the recovery. Its actions are keeping funding costs low and supporting the
supply of credit to households and businesses. This accommodative approach will be maintained as long as
it is required. The Board will not increase the cash rate target 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.
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