(Bloomberg) -- Australia’s central bank kept its interest rate and yield target unchanged, betting its current settings and record fiscal spending will support the recovery from recession even as Victoria state’s tighter and longer lockdown adds to headwinds.

Reserve Bank of Australia Governor Philip Lowe and his board left the cash rate and three-year bond yield target at 0.25% on Tuesday, as expected by most economists. The bank will purchase Australian government securities on Wednesday, to keep yields consistent with the target, Lowe said.

The RBA is trying to navigate the hit to the economy from the effective isolation of Victoria, which accounts for almost a quarter of gross domestic product, and the broader impact on sentiment with rising uncertainty.

“As Australians deal with the coronavirus, the economy is being supported by the substantial, coordinated and unprecedented easing of fiscal and monetary policy,” Lowe said in a statement after the decision. “This accommodative approach will be maintained as long as it is required.”

Victoria has ordered a shuttering of large parts of Melbourne’s economy for six weeks as the virus outbreak shows no signs of abating, three weeks after Melbourne’s 5 million residents were ordered back into lockdown.

The renewed restrictions look set to derail the economic recovery that was underway. Hiring intentions have slowed and consumer confidence is becoming increasingly pessimistic.

Amid the growing gloom, commodities are providing a welcome tailwind for the economy. The price of iron ore -- Australia’s largest export -- remains north of $100, reflecting demand from China as it churns out steel under a stimulus program to revive its own economy.

That commodity demand, coupled with attractive relative rates, has driven about a 25% rebound in the local currency from a March low. While the RBA would prefer a lower Australian dollar to aid the recovery, it sees the level as broadly in line with fundamentals.

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