FIXED INTEREST TERM DEPOSIT & FIXED RATES TO STAY LOW
Australia ’ s recovery from COVID will continue to challenge fixed interest investors for some years . Despite the COVID interstate border re-openings and low case numbers , the impact on small business and some specific sectors will lead to a slow and fragmented recovery in jobs from those un-fortunately lost during 2020 .
The Reserve Bank of Australia ( RBA ) cut the cash rate in November to its forever low of 0.10 % and declared it will stay there until inflation returns . The RBA will be more active in fixed interest markets holding down bond rates to 5 years maturity to under 0.25 % and actively bid lower yields on the 7 to 10 year maturity bonds . This is creating record low borrowing rates for all , in the hope it contributes to real jobs creation .
The extension and expansion of spending by state and federal governments continues to cushion business and consumer sentiment ; a truly record-breaking level of stimulus , and mirrored internationally . Developed countries worldwide are similarly stimulating their economies . All this may see the prospect of modest increases in inflation , but not likely before the second half of 2021 .
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