RBA tipped to cut interest rates tomorrow as coronavirus outbreak continues to roil global economy

Amid fears the coronavirus outbreak will hasten a recession, the Reserve Bank will meet ahead of schedule tomorrow, with analysts expecting interest rates to drop to a fresh low of 0.25%.

“The RBA is under extreme pressure, following the US Federal Reserve’s extraordinary measure of slashing their official rate by 100 basis points,” said Mozo’s banking expert Peter Marshall.

“Other central banks around the world are implementing similar measures where they can, so it’s not surprising that the RBA is readying to take action.”

In a statement issued on Monday, the RBA said it would soon be introducing a bond purchasing program to protect against further economic fallout.

This comes after the US Federal Reserve decided to slash its benchmark interest rate to near zero and relaunch its GFC-era quantitative easing program.

In a move that will prove instructive to central bankers around the world, the Fed will purchase Treasury bonds and mortgage-backed securities totalling $700 billion in a bid to flush the American economy with cash.

Going down the same path would be a first for Australia. While RBA Governor Philip Lowe gestured towards the possibility months ago, he made clear QE would only be implemented if things were dire.

Details of the plan will be announced on Thursday.

RELATED: RBA prepares for bond buying after US Fed cuts rates to near zero

Minutes from the RBA’s March 3 meeting show the board recognised the potential of the virus to derail economic activity, “particularly in the education, transport and tourism sectors.”

“The uncertainty associated with the outbreak was also likely to affect household spending and business investment in coming months,” they added.

Members acknowledged that even before the virus had begun to roil the domestic economy, progress towards full employment and the board’s inflation target of 2-3% had been sluggish.

They also considered the chance more rate cuts would further inflate property prices, but ultimately decided that a lower cash rate was necessary to get the economy back up and running again.

So if you’re wondering where to keep your savings now that interest rates are set to drop further, visit our savings account comparison page to compare your options.

Savings account comparisons on Mozo

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Last updated 4 October 2024 Important disclosures
  • Savings Account

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    4.75% p.a.(for $0 to $1,000,000)

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    Bonus variable rate is available for the first 4 months.

    Enjoy a high interest savings account with no account keeping fees to pay. Save up to 10% on eGift cards at over 50 retailers with Macquarie Marketplace. Multiple 2024 Mozo Experts Choice Award winner.

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    5.50% p.a. (for $0 to $100,000)

    0.55% p.a.(for $0 and over)

    Yes up to $250,000

    Deposit $1,000 into a personal ING account, make 5 eligible transactions with a linked Orange Everyday account and grow the balance each month.

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  • MoneyMAX Account

    No Current Offer

    4.70% p.a.(for $1 and over)

    Yes up to $250,000

    Unlimited access 24/7 via Banking App, Phone & Internet Banking. Interest is calculated daily and paid monthly. No transaction fees or monthly service fees. No minimum balance or withdrawal restrictions. Online access only.

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  • Savings Accelerator

    3.55% p.a. (for $0 to $50,000)

    2.85% p.a.(for $0 to $50,000)

    Yes up to $250,000

    New customers receive an introductory bonus 0.70% p.a. variable kick starter rate for the first 4 months on balances up to $500,000.

    Enjoy the flexibility to access your funds with no monthly deposit requirements or lock-in terms. No ING fees to pay. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^

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  • Life - 18-29 years old

    5.20% p.a. (for $0 to $30,000)

    1.85% p.a.(for $0 and over)

    Yes up to $250,000

    Make 5 eligible card purchases per month with a linked Westpac Choice account, make one deposit and grow the balance each month.

    Are you 18 - 29 years of age? Earn up to a generous variable interest rate on your savings when you spend and save with Westpac. For individuals aged 18 to 29 on Westpac Life account balances up to $30,000.

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