RBA holds steady on cash rate in light of Budget stimulus

Record low interest rates are likely to continue in the wake of the Federal budget as the Reserve Bank of Australia considers ways to support jobs and economic growth, economists predict.

The record-low cash rate target of 0.25% remains unchanged for the seventh month in a row, following emergency measures taken in March to reduce impacts of a COVID-driven recession.

Economics commentator and former Deutsche Bank investment banker Claire Rushe said the RBA’s decision to maintain the current cash rate setting was not surprising.

“With fiscal policy drip-feeding all day, why would you use the last bullet of monetary policy,” she said.

“It would be quite poor timing.”

The RBA also considered future “additional monetary easing,” signalling further rate cuts as the economy expands.

Despite the RBA’s “dovish” language, Ms Rushe said she was sceptical of deeper rate cuts.

She said her time at Deutsche Bank during the 2008 global financial crisis saw wholesale slashing of rates, resulting in clients “paying money to put cash in the bank.”

“Cash rates going down further may not have much kick,” Ms Rushe said.

“But dovish language like this keeps the general population thinking there is monetary policy potential to support it. Hopefully, they don’t need to use it.”

Ms Rushe said it would be worthwhile to see how the Federal government’s fiscal stimulus handled the reduction of JobKeeper and JobSeeker.

The RBA noted economic recovery was under way in most of Australia, although the second-wave covid-19 outbreak in Victoria had resulted in “further contraction.”

With the differing levels of economic recovery around the country, Ross Forrester, director of Westcourt Accounting in Perth, said he expected the central bank to remain stoic.

“The blunt instrument of the RBA has big impact – if you change interest rates, you change them across Australia,” he said.

“Whereas the government’s fiscal stimulus can target business needs in places like Victoria and New South Wales which are more affected than say, WA.”

The RBA is expected to publish a full set of updated forecasts next month.

Published in the NewsVineWA – student journalism publication for Edith Cowan University in Western Australia:

RBA holds steady on cash rate in light of Budget stimulus

WA’s container deposit scheme launched

Western Australians can now cash in their eligible drink containers for a 10-cent refund at over 200 Containers for Change refund points across the State.

Most aluminium, glass, plastic, steel and liquid paperboard drink containers between 150ml and 3L are eligible.

There are four types of refund points in WA where you can return eligible containers: Depots, Bag Drops, Reverse vending machines and Pop-up refund points.

WA Premier Mark McGowan said the scheme is an important step forward for recycling in Western Australia.

“People in WA use 1.3 billion drink containers every year, that’s 3.5 million a day, 150,000 an hour and more than 2,000 a minute. We know that currently, these containers make up 41 per cent of all litter here in Western Australia,” Mr McGowan said. “Western Australians have been crying out for a container deposit scheme.”

Containers for Change also provides fundraising opportunities for community groups – enabling Western Australians to give back to their local community.

WA Environment Minister Stephen Dawson said over 1,000 organisations have already registered and expected that number to grow.

“I’d strongly encourage all Western Australians to get involved, to start returning their eligible containers and start making change,” the Minister said.

Eligible containers included on the scheme’s list of products must display the refund mark (e.g. “10c refund at collection depots/points in participating State/Territory of purchase”).

Excluded containers include: Any plain milk containers, glass containers which have contained wine or pure spirits, containers 1L or larger which have contained flavoured milk, pure fruit or vegetable juice, all cordial or syrup containers, and registered health tonics.

Coordinator of the container deposit scheme, Western Australia Return Recycle Renew (WARRRL), said once containers are returned they join other recycled goods sold through an international online auction portal.

Recyclers then convert containers into raw materials like aluminium ingots and shredded plastic, which can be re-manufactured into new products.

Western Australia is the fifth state or territory to adopt a container deposit scheme, following the lead of South Australia, Northern Territory, New South Wales, Australian Capital Territory and most recently, Queensland.

Further information about Containers for Change, including refund point locations can be found at http://www.containersforchange.com.au

WA’s container deposit scheme launched