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SYDNEY – The Reserve Bank of Australia on Tuesday launched a strident defense of its quantitative easing program, telling financial markets it remains committed to keeping government bond yields low to support the economy and that it will use the considerable firepower at its disposal to achieve its objectives if necessary.
“The Bank is ready to make further adjustments to its purchases in response to market conditions … the Bank is ready to do more (QE) if necessary,” RBA Governor Philip Lowe said in a statement after the central bank’s March policy. Meet.
“The Board of Directors remains committed to maintaining very favorable monetary conditions until its objectives are achieved … The Board of Directors does not expect these conditions to be met until 2024 at the earliest” , he added.
The comments come as improving economic fundamentals and the rollout of Covid-19 vaccines have put upward pressure on government bond yields around the world, testing the QE programs of major central banks.
The RBA significantly ramped up its government bond purchases earlier this week, signaling its determination to keep bond yields low.
The RBA announced an Australian $ 100 billion (US $ 77.72 billion) government bond purchase program in November and rolled out an equal-sized extension in February that will run through September.
As expected, the RBA board left its official cash rate unchanged at 0.10% during the policy meeting, and also kept its target for three-year government bonds at the same level. .
The RBA has its policy challenges on the domestic front, as house prices rise thanks to historically low interest rates and a glut of household savings.
Economic growth data due for release on Wednesday is expected to show the economy was hit hard in 2020 by the Covid-19 pandemic, but saw a remarkable recovery in the second half of the year.
Write to James Glynn at [email protected]
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