RBA’s Debelle says monetary policy support likely for some time, rate hike years away


Reserve Bank of Australia 

Headlines via Reuters: 

  • says liquidity operations working as intended
  • says effective cash rate around 13-14 bps, helping keep borrowing costs low across economy
  • says economy has turned out to be somewhat better in the June quarter than feared
  • says declines in GDP and in hours worked have still been historically large
  • says considerable uncertainty over the economic path from here
  • says will require considerable policy support for quite some time to come
  • says RBA stands ready to do more as circumstances warrant
  • says any rate hike likely to be some years away given outlook for inflation, jobs
  • 0.25% target for three-year bond rate reinforces the forward guidance on the cash rate
  • if yield target credible, the RBA does not need to purchase many bonds at all to achieve the target
  • says stands ready to scale up bond purchases if necessary to achieve objectives
  • says ready to buy illiquid bonds shorter than 3-years if their yields rise too high
  • says RBA bond buying unlikely to stoke inflation, which is set to remain below target
  • says Australian government has capacity to repay bonds it has issued
  • says RBA to scale back longer-term repo offers in daily operations
  • says over 60 institutions have drawn on RBA’s term funding facility

Debelle is not downbeat here. He is not turning cartwheels, but following along with Governor Lowe’s less dour assessment for the economy and policy ahead. 

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