Institutional Responses to COVID-19

This week, we summarise what is currently on offer for people financially impacted by Coronavirus.

At the start of April, stimulus packages totalled approximately $331.6 billion, or 16.6% of GDP.

Monetary Policy:

Over March, The Reserve Bank of Australia reduced the cash rate, and launched unconventional monetary policy. The RBA have reduced the cash rate to the effective lower bound of 0.25%. The RBA signalled there would be no further reductions to the cash rate, and that it would not be lifted until inflation was comfortably between 2-3%, and the labour market was trending towards full employment.

  • A 3-year funding facility is available to authorised deposit-taking institutions. The funding facility will have a fixed lending rate of 0.25%. Lenders may receive funding to the equivalent of 3% of the credit outstanding to households and businesses. Additional funding will be available for business lending, but not for residential mortgage lending. Treasury is supporting smaller lenders with a $15 billion advance.
  • A yield target of 0.25% has been set for 3-year government bonds. The RBA will target lower rates through the purchase of various government bonds and semi-government securities. This is aimed at putting more money in the hands of investors, and the target yield may be subject to change.
  • The Australian Prudential Regulation Authority (APRA) is enabling the implementation of these policies. The regulator has postponed the implementation of further capital reforms to 2021, and has relaxed expectations of capital ratios.

Fiscal Policy:  Federal Government initiatives announced so far total $213.6 billion.

For businesses:

For households:

Queensland Government – $4 billion

Source: CoreLogic – Click here to read article in full.