RBA dep gov Debelle says watching AUD rate carefully, intervention is a policy option

Author: Eamonn Sheridan | Category: Central Banks

Reserve Bank of Australia deputy governor Guy Debelle speaking on the economy and monetary policy.

  • board continues to assess other monetary policy options
  • one option is to buy bonds further out along the curve to lower rates at longer maturities
  • bond purchases would still be conducted to maintain the 3-yr yield target
  • foreign exchange intervention is another policy option
  • not clear if intervention would be effective as AUD  "broadly aligned with fundamentals"
  • a lower exchange rate would definitely be beneficial for Australian economy
  • watching developments in forex market carefully
  • third option is to lower cash rate, without going into negative territory; 
  • fourth option is negative rates
  • increase in state, federal government debt "definitely manageable"
  • absent fiscal stimulus, economy would be significantly weaker, debt levels even higher
  • we are now in a gradual and uneven recovery
  • still expect unemployment rate to rise from current 6.8%
  • estimate that Victoria lockdown has subtracted around 2% from national GDP in the September quarter

Bolding above is mine. Intervention comments are pie in the sky, as Debelle pretty much admits, but gives the AUD a shake lower. The other 3 policy options Debelle outlines are all about further accommodation and all are combining with the intervention comments to weigh on the AUD .... all very dovish still from Debelle. 

here is the link to the full text: The Australian Economy and Monetary Policy
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Background:
Reserve Bank of Australia deputy governor Guy Debelle speaking on the economy and monetary policy.
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