To me, really big measures are needed and this JobKeeper policy meets that need.
The government’s main focus at the moment appears to be to strengthen the safety net designed to help individuals and families impacted by COVID-1.
The RBA will and should cut rates to 0.25 percent.
KPMG modelling in a report published today estimates Australian GDP would be at least 0.9 percent lower in 2020 because of the COVID-19 pandemic.
Experience has taught us that fiscal stimulus measures need to be targeted, timely and temporary, and these form three of the Federal Government’s seven principles.
Australia’s good fortune is substantial: we have had nearly three decades of uninterrupted economic growth, and our major cities are some of the most liveable in the world.
Last month it was a 50-50 call on whether the RBA would reduce the cash rate. This month it was a lot clearer – rates were rightly cut by 0.25 percent today and there will probably be another 0.25 percent cut next month.
The latest GDP results reaffirm the economy is stuck in slow mode, with both consumption and investment activity treading water
I would suggest that the most prudent action from tomorrow’s Board meeting is for the RBA is to keep rates on hold.
Geopolitical risks are increasingly impacting the outlook of the global economy.
While the decision to cut the cash rate by 25bp to 0.75 percent was priced into the market as a near certainty, the factors influencing the outcome were certainly not straightforward.
The RBA was right to keep rates on hold at 1 percent today and leave any further cuts till later in the year.
The key here is that Newstart recipients are amongst the poorest people in society – so they spend, rather than save, almost all they receive, putting money back into the economy.
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