The Reserve Bank of Australia has held official interest rates at a record low 0.25 per cent ahead of new data set to confirm the nation's deepest economic downturn since the 1930s.
Following its regular monthly meeting on Tuesday, RBA governor Philip Lowe confirmed official rates would remain where they have been since March.
The meeting was the bank's last before the June national accounts to be released on Wednesday, which are expected to show the economy contracting by at least 5 per cent through the quarter. Economists expect the figures to confirm Australia's first recession since 1990-91.
While keeping rates steady, Dr Lowe revealed the bank would continue to offer cheap finance to banks under its term funding facility.
In a sign the RBA expects the coronavirus pandemic to be a long-term drag on the economy, banks will be offered the equivalent of 2 per cent of their outstanding credit at an interest rate of just 0.25 per cent for the next three years.
Dr Lowe said banks had drawn $52 billion under the existing term funding arrangement.
"Today's change brings the total amount available under this facility to around $200 billion," he said. "This will help keep interest rates low for borrowers and support the provision of credit by providing ADIs [authorised deposit-taking institutions] greater confidence about continued access to low-cost funding."
Dr Lowe said the economy was going through a "very difficult period" but it was not as severe as originally feared.
"This recovery is, however, likely to be both uneven and bumpy, with the coronavirus outbreak in Victoria having a major effect on the Victorian economy," he said.
Dr Lowe said the economy was being supported by co-ordinated policy responses, including government spending, adding this would be needed for an extended period.
"Indeed, fiscal and monetary support will be required for some time given the outlook for the economy and the prospect of high unemployment," he said.
Australian Bureau of Statistics figures earlier on Tuesday showed net exports would contribute about 0.5 percentage points towards growth in the quarter while government spending is expected to provide a similar boost.
But there are more signs of the way the stage four lockdown of Melbourne is affecting the national economy.
CoreLogic's monthly measure of house values showed Melbourne suffered the biggest hit of any capital through August, falling by 1.4 per cent. House values in Melbourne fell 4 per cent in the past quarter and are down 2.5 per cent so far this year.
Sydney fared better but even there house values dipped 0.5 per cent in August to be 2.4 per cent lower over the quarter. They are still up by 1.7 per cent this year.
Data from ANZ's network of debit and credit cards, released on Tuesday, showed spending growth turned negative in the week to August 29. It was the first time spending had turned negative since May 17.
Spending in Victoria is now down 27 per cent from last year while in NSW it is down by 0.5 per cent.
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Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.