
Australia signals it may resort to QE after economic hit from virus
Jamie Smyth reports from Sydney
Australia’s central bank forecasts the coronavirus will knock at least half a percentage point off gross domestic product in the first quarter and signalled it may have to launch a quantitative easing programme to boost the economy.
Guy Debelle, deputy governor of the Reserve Bank of Australia, told parliament the bank had capacity for only one more interest rate cut, which would reduce official rates to a new record low of 0.25 per cent.
“Beyond that, we will have to consider quantitative easing,” said Mr Debelle, who spoke to MPs late on Wednesday following the RBA’s rate cut on Tuesday, which reduced official interest rates to a record low of 0.5 per cent.
He said he did not think the RBA would consider negative interest rates.Economists are forecasting the economy will contract in the first quarter, raising concerns that Australia could experience its first recession in 29 years if the coronavirus outbreak is not brought under control speedily.
Meanwhile, Australian authorities confirmed on Thursday that a 95-year-old nursing home resident who died on Tuesday had tested positive for the virus, making her the country’s second Covid-19 fatality.
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