Banking News

Central banks act amid bank COVID-19 fallout

(12 March 2020 – Australia) The Reserve Bank of Australia (RBA) is considering emergency monetary policy easing in response to the US Federal Reserve and Reserve Bank of New Zealand (RBNZ) cutting to near zero.

The RBA cut the official overnight cash rate to a record low of 0.5 percent on the first Tuesday of March 2020 and signalled it was willing to do more to boost the economy and pump liquidity into ailing credit markets if needed. The RBA also buttressed the banks with a significant liquidity boost on the overnight money market, purchasing bank assets through ‘repo’ (repurchase) agreements totalling A$8.8 billion, materially over the normal daily repo average volume. Up to two thirds of all the transactions involved the purchase of transaction terms of 95 days (A$5.6 billion) following matching moves from the US Federal Reserve as travel bans and ‘social distancing’ take hold in countries globally.

“Australia’s financial markets are operating effectively and the bank will ensure that the Australian financial system has sufficient liquidity” RBA Governor Philip Lowe stated.

ANZ has slashed business variable rate loan products in response to the economic impact of the coronavirus by 25 basis points across a range of business products, effective immediately.

“The changes have been made in response to growing threat to business activity posed by the coronavirus (COVID-19) pandemic. This reduction will provide some immediate relief to our small business customers in particular as they deal with the challenging environment created by the global outbreak of the COVID-19 coronavirus” stated ANZ Commercial Banking Managing Director, Isaac Rankin,

Australian Prime Minister Scott Morrison released a targeted A$17.6 billion stimulus package designed to “keep Australians in jobs, keep businesses in business and support households’, in light of the growing impact of the coronavirus (COVID-19) on the domestic economy.

The Australian Banking Association, led by CEO Anna Bligh, welcomed the federal government’s stimulus package and asserted that it is also ready to help navigate the pressing economic challenges posed by the coronavirus in the coming weeks and months.

“This economic stimulus package will be a welcome shot in the arm for businesses and individuals. Australia’s banks are strong, stable and open for business, including for any company wanting to take advantage of initiatives in the government’s stimulus package such as the increase to the threshold of the instant asset write-off from A$30,000 to A$150,000” Ms Bligh said.