RBA announces their latest monetary policy decision - 7 April 2020
- Prior 0.25%
- Will do what is necessary to achieve yields target on 3-year bonds at 0.25%
- Coordinated monetary and fiscal response will soften expected economic contraction
- Once the virus is contained, a recovery in the global economy is expected
- A very large economic contraction is, however, expected to be recorded in Q2
- Unemployment rate is expected to increase to its highest level for many years
- If conditions continue to improve, it is likely that smaller and less frequent bond purchases will be required
- Operations at longer terms will continue, but the frequency of these operations will be adjusted as necessary according to market conditions
The RBA is maintaining that their current policy stance is enough for now to ensure a recovery in the economy, when paired with the fiscal response set out by the government.
The decision leaves little to be desired but at least they are providing some clues about their QE stance i.e. still more on the side of yield curve control and that they will wean it off slowly as the economic situation starts to show some improvement down the road.
That said, the RBA says that they will expect such policy to remain in place until "progress is being made towards the goals for full employment and inflation".
This means that what we're seeing now could likely be in place for a couple of years to come.
