Australia cuts benchmark interest rate to record low 0.25%

Australia’s central bank on Thursday cut its benchmark interest rate by a quarter of a percentage point to a record low 0.25%, urgently seeking to alleviate economic shocks from the new coronavirus. The move comes two weeks after a cut of the same magnitude and marks the first time since July 1997 that the Reserve Bank has acted on interest rates outside its monthly cycle of board meetings.

The bank has said it will not take the cash rate below 0.25%.

The cut follows coordinated moves by the U.S. Federal Reserve, European Central Bank and other central banks to support financial markets and companies.

With further rate cuts now off the table, Reserve Bank Governor Philip Lowe will give a speech later Thursday to outline other measures the bank will take to support an economy rocked by international travel restrictions, bans on large public gatherings and escalating unemployment.

The bank said in a statement it was prepared to buy government securities and securities issued by the state and territory central borrowing authorities from Friday.

The banks also said was establishing a facility to offer three-year funding to banks to reduce funding costs and to encourage support of businesses.

Australia’s largest airline Qantas plans to stand down 20,000 employees and the island state of Tasmania will deter tourists by making interstate visitors self-isolate for 14 days.

The government last week announced a 17.6 billion Australian dollar ($11.4 billion) economic stimulus package and says further spending is in the pipeline.

Australia’s jobless rate fell to 5.1% in February from 5.3% the previous month, according to Australian Bureau of Statistics data released on Thursday.

But conditions are expected to deteriorate.

The Organization for Economic Cooperation and Development this month forecast that economies “strongly interconnected with China” such as Australia would suffer most the virus-linked global downturn. The OECD forecast that the COVID-19 outbreak will reduce Australian economic growth by half a percentage point to 1.8% this year.