RBA announces no change to monetary policy, as expected

Author: Eamonn Sheridan | Category: Central Banks

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. 

Reserve Bank of Australia December 2020 decision
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