On Tuesday we had the first Reserve Bank of Australia monetary policy meeting for the year.
Rates were left unchanged, the outlook was rejigged a little, and the biggest news was the Ban announced it's be extending its QE beyond the expiry of the first bond-buying in mid-April.
Then on Wednesday Governor Lowe gave a speech where he explained again the bank's reasoning, which, in a nutshell (and paraphrasing):
- its keeping rates and the Australian dollar lower than otherwise
- central banks elsewhere have extended their own bond biying and so for the RBA to stop would be likely to prompt a higher AUD
- the RBA's economic outlook is for inflation and employment falling short of the Bank's goals for a good few years to come
(I posted this yesterday if it looks familiar).
Tomorrow, Friday 5 February, from the RBA we get:
- Appearance by Philip Lowe, Governor, before the House of Representatives Standing Committee on Economics, Canberra5 February 2021, 9.30 am Sydney time (2230GMT)
- Statement on Monetary Policy5 February 2021, 11.30 am (0030GMT)
To wrap up, the Australian economy is showing signs of improvement, the next challenge is going to be how it comes along as fiscal support is wound back. Vaccine roll-out should be a positive but this has not yet begun. The RBA will not be unveiling any further measures in the near future ... but the caveat is that winding down of fiscal support.
