RBA announces no change to monetary policy, as expected
Reserve Bank of Australia December 2020 decision
- At its meeting today, the Board decided to maintain the current policy settings, including the targets of 10 basis points for the cash rate and the yield on 3-year Australian Government bonds, as well as the parameters of the Term Funding Facility and the government bond purchase program.
Headlines via Reuters:
- Board not expecting to raise cash rate for at least 3 yrs
- prepared to do more if necessary
- will keep the size of the bond purchase program under review
- says globally, the news has been mixed recently
- addressing high unemployment is a national priority
- fiscal and monetary support will be required for some time
- has been positive news on the vaccine front, which should support the recovery of the global economy
- Australian economic recovery is underway and recent data have generally been better than expected
- says recovery is still expected to be uneven and drawn out and it remains dependent on significant policy support
- says a further rise in the unemployment rate is still expected
AUD is little changed on the announcement - after the substantial changes made to policy in November, there were no expectations of anything further from the Bank today.
As a side note, since the November meeting the AUD has risen around 3% on a trade weighted basis. Westpac's index of commodity prices is up nearly double that though, so there is a good argument to be made the AUD is underperforming. Certainly the strains with China and therefore the impact of China's imposts on Australian exports to the country would be a solid reason for the AUD underperformance.
Full text of Governor Lowe's statement:
And that's it for RBA meetings until February (the 2nd), there is no January RBA meeting.