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Phil Lowe hoses off any thought of rate hikes

www.macrobusiness.com.au
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Phil Lowe in a speech just now: Monetary policy I would now like to turn to monetary policy, where I will focus my remarks on our bond purchase program and the outlook for the cash rate. First, though, I want to emphasise that the RBA's package of monetary policy measures is providing ongoing and important
Phil Lowe in a speech just now:

Monetary policy

I would now like to turn to monetary policy, where I will focus my remarks on our bond purchase program and the outlook for the cash rate.

First, though, I want to emphasise that the RBA's package of monetary policy measures is providing ongoing and important support to the Australian economy as it deals with the Delta outbreak. This package includes:

a record low cash rate

a target of 10 basis points for the April 2024 Australian Government bond

a bond purchase program under which we have already purchased $200 billion of government bonds, with more to come; and

the low-cost term funding facility for Australia's banks, under which $188 billion has been provided for 3 years.

This monetary policy package is working by: keeping funding costs and lending rates low across the economy; ensuring that the financial system is very liquid; supporting household and business balance sheets; and contributing to an exchange rate that is lower than it would be otherwise. It is through these transmission mechanisms that our policies are supporting, and will continue to support, the recovery of the Australian economy over the months ahead.

At the Reserve Bank Board meeting last week, we considered how the bond purchase program should evolve in response to the Delta outbreak and the change to the economic outlook. The conclusion was that we will purchase $4 billion of bonds each week, as previously announced, but that we will extend the period over which we do this until at least mid February next year.

This conclusion reflected a number of considerations.

The first and foremost is the delay in the economic recovery and the associated increase in uncertainty about the future. Given that the recovery has been delayed, we considered it appropriate that we delay any consideration of a further taper in our bond purchases until next year. By February we will know more about how the economy is responding to the easing of…
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