In the minutes of December 1 monetary policy meeting, RBA said economic recovery in Australia was “under way” and and recent data had “generally been better than expected”. Employment rate was “likely to peak lower than the 8 per cent rate expected”. Though, recovery was still expected to be “uneven and protracted”, dependent on “significant policy support and favorable health outcomes”. High unemployment rate and excess capacity were expected to result in “subdued wages growth in inflation over coming years”.
RBA reiterated, “the Bank remained prepared to purchase bonds in whatever quantity required to achieve the 3-year yield target”. The size of bond purchases is kept “under review” and it’s “prepared to do more if necessary. Also, RBA ” remains committed to not increasing the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range”. No increase in cash rate is expected for “at least 3 years”. Also, ” it would be appropriate to remove the yield target before the cash rate itself were increased.”
