As lockdown lifts, rates should stay put

Despite Victoria's success in containing COVID-19 and lifting stage-four restrictions, interest rates should stay at the historically low of 0.25 per cent, according to The Australian National University's Shadow RBA. In its latest vote , the Board favours a rate hold - but only just. The Shadow Board is 56 per cent confident that keeping the cash rate on hold is the right policy. The Board's conviction a rate cut is needed is 44 per cent, while its confidence in a rate hike is 0 per cent.   -   - "Easing of restrictions, especially in Victoria, might improve the ABS unemployment rate currently at 6.9 per cent," Shadow Board member Dr Timo Henckel said. "However, the labour market, and the economy more generally, remain fragile."   The biggest concern for the global economic outlook is the dramatic worsening of COVID-19, particularly in the US, Europe and South Asia.   "With a vaccine still months away, the prospects of a swift economic rebound are rapidly diminishing," Dr Henckel said.
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