RBA ‘in a bind’ over coronavirus rate cuts

The Age and SMH Senior economics correspondent Shane Wright says “we are on the precipice of going into completely unchartered waters” amid increasing concerns over the economic impact of the spreading coronavirus. Concerns over contact with Europe were raised after the number of coronavirus cases confirmed in Italy jumped by 800 overnight. Mr Wright told Sky News “from a medical point of view, trying to block off Italy would be extremely difficult”. He said a move to place a travel ban on Italy “becomes a really big issue” considering “just how important our financial ties with Europe are”. The RBA is expected to cut interest rates on Tuesday as part of an emergency response to the virus, a decision Mr Wright said would put them “in a bind”. “This is an absolute supply side problem for RBA and federal government and cutting rates by itself doesn’t act the same way as it would as what we saw in the GFC which was on demand side," he said. “The pressure is building in that space here the treasurer and pm will have to soon make a call.” Image: AP

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