Minutes of the November 3 RBA meeting noted that the board is “prepared to do more if necessary”, after delivering a package of additional stimulus. Though, “focus over the period ahead will be the government bond purchase program”.
Under the current program to purchase longer-dated bonds, RBA would buy nominal bonds issued by the Australian Government and by the states and territories, with an expected 80/20 split. Purchases would be done through secondary market, but not directly from the government. Also, RBA “remained prepared to purchase bonds in whatever quantity is required to achieve the 3-year yield target.”
As for interest rate, with cash rate target at 0.10% and exchange settlement rate at 0%, they would have been “lowered as far as it made sense to do so in the current environment”. There is “little to be gained from short-term interest rates moving into negative territory”. Negative policy rate is seen as “extraordinarily unlikely”.
