RBA declares rate hold but urges banks to increase lending
Despite fears of future negative rates from the corporate community, the RBA has held firm, electing to hold the cash rate at 0.25%, where it has sat since its emergency rate cut in mid-March. Today’s decision falls in line with the bank’s previous rhetoric. On multiple occasions Reserve Bank Governor, Philip Lowe has been quoted as saying that the cash rate is “extraordinarily unlikely” to drop into the negative, most recently affirming this stance during the recent FINSIA Forum on 21 May, a panel discussion between Australian financial regulators. “I said previously that it was extraordinarily unlikely that we would have negative interest rates and there has been no change,” Dr Lowe said. “The board is not contemplating negative interest rates in Australia. I think the costs of that exceed the benefits.” However, in past weeks the corporate world has been quietly preparing in case of a rate drop. John Elias, leader of national law firm Minter Ellison’s de