RBA to move towards unwinding unconventional policy in July - BofA
AUD/USD up 26 points to 0.7757 today
Bank of America Global Research discusses the RBA policy trajectory.
"The RBA will update policy guidance at the 6 July Board meeting. Governor Lowe will hold a press conference, as was the case when yield curve control was unveiled last March and quantitative easing (QE) was introduced in November. So this is a formal change of direction. It seems almost certain the 3-year yield target will not be extended beyond Apr-2024, but the RBA now looks likely to adopt a more flexible and data-dependent approach to extending QE," BofA notes.
"Considerable stimulus will likely remain in place. A
more open-ended third round to QE is more likely to commence at the
current pace of AUD5bn per week where RBA purchases would reach AUD60bn
after 3 months. An extension of QE would help to keep net ACGB supply
negative in the new fiscal year and help to temper 10yr swap spread
tightening," BofA adds.