Reserve Bank of Australia holds rates, expands bank funding scheme

[SYDNEY] Australia's central bank left its cash rate at a record low of 0.25 per cent on Tuesday, but surprised by expanding a programme of cheap funding for banks and extending it out to the middle of 2021.

The Reserve Bank of Australia (RBA) made the announcement following its monthly meeting. A Reuters poll of 25 analysts had found all expected a steady outcome this week.

The RBA said its expanded Term Funding Facility would allow banks to borrow from the RBA equivalent to 2 per cent of their outstanding credit at a fixed rate of 25 basis points for three years.

REUTERS