Reserve Bank of Australia Governor Lowe

Speech title is:

COVID-19, the Labour Market and Public Sector Balance Sheets

(full text at that link)

  • says have turned the corner on jobs, but path ahead will be bumpy
  • unemployment rate likely to increase further, even with recovery underway
  • board reviewed some alternative monetary policy options in July meeting, decided on no change
  • says board has not ruled out future changes to policy if necessary
  • says no need to intervene to push down a$, which is in line with fundamentals
  • no change to board's view that negative interest rates in Australia are extraordinarily unlikely
  • monetary financing of fiscal policy is not an option under consideration in Australia
  • says government should use its balance sheet to smooth out pandemic shock
  • Australian government able to finance itself in bond market, on very favourable terms
  • govt borrowing for fiscal stimulus manageable, affordable and "the right thing to do"
  • dealing with debt is something for the future, to be done through economic growth
  • says RBA balance sheet has expanded to A$280 bln, up from a$180 bln prior to pandemic
  • says banks have borrowed A$25 bln from term funding facility, expected to rise further
  • market understands RBA prepared to use balance sheet in whatever quantity needed to maintain 3-yr yield target

No indication from Lowe he is perturbed by the shut down of a fifth of the economy.

more to come