💙 🔷 Not impressed by Big Tech in Q3? Explore these Blue Chip Bargains insteadUnlock them all

UPDATE 1-Australia c.bank ready to act on "unprecedented" coronavirus challenge

Published 17/03/2020, 02:31 pm
© Reuters.
ANZ
-
QAN
-

* Social distancing, travel bans already hitting consumer spending

* Investors awaiting RBA 'special' announcement on Thursday

* Data on ANZ spending shows dining out, entertainment biggest hit (Adds economist quote, secondary data, surveys showing hit to Australian economy from the coronavirus)

By Swati Pandey and Wayne Cole

SYDNEY, March 17 (Reuters) - Australia's central bank reiterated it stood ready to ease policy further in the face of the 'unprecedented' spread of the coronavirus, adding to speculation of aggressive stimulus this week to counter the widening economic fallout of the pandemic.

Minutes of the Reserve Bank of Australia's (RBA) March meeting released on Tuesday showed policymakers were ready and willing to ease monetary conditions further to support the Australian economy.

Members also agreed it was important to "maintain contact" given the speed of events, suggesting they would consider moving before the next scheduled policy meeting on April 7.

Speculators latched on to a pledge by the RBA this week that it will announce a new package of stimulus measures on Thursday, betting it would include an out-of-cycle cut to the cash rate to 0.25% together with unconventional policy measures to loosen financial conditions. at ANZ Banking Group ANZ.AX expect these steps to help lessen stress in funding markets.

"But it will not be a straightforward path and is predicated on what additional actions the RBA takes and a reduction in USD funding stress," rates strategist Jack Chambers wrote in a note.

Chambers added that combined with the U.S. Federal Reserve's injection of hundreds of billions of dollars of liquidity, there should be "some normalisation" to market conditions.

"Although, in this market it is hard to be definitive about anything."

The RBA's special meeting comes amid the mounting economic toll from the coronavirus, with many analysts predicting the Australia's A$2 trillion economy will slip into recession in the first half of the year after 29 years of uninterrupted growth.

Central banks around the world have launched a coordinated round of easing, led by a 100-basis-point rate cut from the Fed on Sunday, but the measures haven't staunched the haemorrhaging in markets. Australia's national carrier Qantas QAN.AX said it would cut its international capacity by around 90% until at least the end of May as travel demand plunges because of new restrictions on arrivals related to the coronavirus. on spending by ANZ cardholders and on ANZ's point-of-sale systems on Tuesday showed the deepest cut was in dining out with travel-related and entertainment expenditure also falling sharply.

Spending in eating out contracted by 1% for the week-ended March 4 on an annual basis from a gain of 6% in the week-ended Feb.26. Entertainment was down 20% year-on-year while travel was down around 7%.

Australian leaders are now considering even tighter restrictions on movement of the country's residents, including a ban on social gatherings of more than 100 people. RBA minutes showed a near-term containment of the virus was considered "very unlikely".

Those fears have sapped confidence in markets where the destruction of wealth has prompted businesses to reconsider investment plans, threatening jobs and spending.

"It's now fair to call this the single biggest shock that global aviation has ever experienced," Qantas Chief Executive Alan Joyce said in a memo to the airline's 30,000 staff on Tuesday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.