As we predicted, the RBA has cut interest rates to even lower historic lows. The difference is that for the first time in a long time, the big banks have passed the cut on immediately and in full.
There have also been some announcements around small business loan cuts from the banks, as well as a payroll tax deferral from the Queensland government, which I hope other state governments will emulate.
All this amounts to stimulus, in an attempt by governments to give consumers and businesses confidence to return to spending.
There is no doubt that the coronavirus has impacted pretty much every small business in Australia already, whether it’s directly through issues dealing with China, or indirectly through the downturn in confidence.
This downturn is perfectly exemplified by the absurd stockpiling of toilet paper that has occurred in recent days, as Australians seemingly prepare for the coronavirus apocalypse, contrary to all government advice.
Furthermore, I’ve recently spoken to small business operators in Melbourne and Sydney who have reported lower inquiries and sales than they’ve seen in a decade, over the last couple of weeks.
I am hopeful – as are our state and federal governments – that the stimulus that’s already been announced, along with perhaps more to come, will be enough to inject a bit of life into the economy, and prevent things getting worse.
The interesting counterpoint to all this doom and gloom is the buoyant property market, which has been soaring in recent weeks. A year ago auction clearance rates were flagging at around 50%, while 12 months later they’re set to race past 80% in Melbourne and Sydney in coming weeks.
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