SYDNEY (Reuters) - Australia's central bank said on Friday it expects the country's economy to contract by 6% this year and unemployment to peak at 10% as businesses shut and layoff staff to curb the spread of the novel coronavirus.
The Reserve Bank of Australia (RBA) cut interest rates to a record low 0.25% in an emergency meeting in March and launched an unlimited quantitative easing programme to keep borrowing costs low for banks and consumers.
The economy is on course for its worst recession ever, and its first in 30 years.
In Friday's quarterly statement on monetary policy, the RBA repeated the board was committed to do what it can to support jobs, incomes and businesses as the government finalises plans to fully restart the economy by July.
It expects the unemployment rate to hit 10% by June and remain around 7.5% through 2021. The inflation rate is expected to turn negative in the June quarter before turning mildly positive by year-end.
The RBA said the speed and timing of the economic recovery is very uncertain beyond the next few months but held out hope of a faster recovery if social distancing measures are relaxed a "little sooner."
With fewer than 20 new infections reported each day, Australia's Prime Minister Scott Morrison on Friday began talks with state and territory leaders to decide which restrictions will be eased and when.
"In the context of these extraordinary times and consistent with its broad mandate to promote the economic welfare of the people of Australia, the Reserve Bank will continue to play its role in building the bridge to the time when the recovery takes place," Governor Philip Lowe said in an accompanying statement.