Recognising that the virus has caused major disruptions to economic activity across the world, the RBA announced on Thursday it is slashing rates to 0.25 per cent.

“At some point, the virus will be contained and the Australian economy will recover. In the interim, a priority for the Reserve Bank is to support jobs, incomes and businesses, so that when the health crisis recedes, the country is well placed to recover strongly,” the RBA Governor Philip Lowe said in announcing the decision.

The RBA has also set a target for the yield on 3-year Australian Government bonds of around 0.25 per cent, which will be achieved through purchases of government bonds in the secondary market, starting today.

Mr Lowe confirmed that the RBA will work closely with the Australian Office of Financial Management (AOFM) and state government borrowing authorities to ensure the efficacy of its actions.

The Governor reiterated that Australia's financial system is resilient and well placed to deal with the effects of the coronavirus.

“The banking system is well capitalised and is in a strong liquidity position. Substantial financial buffers are available to be drawn down if required to support the economy. The Reserve Bank is working closely with the other financial regulators and the Australian government to help ensure that Australia's financial markets continue to operate effectively and that credit is available to households and businesses,” he concluded.