In a speech, RBA Governor Philip Lowe said “very significant monetary support will need to be maintained for some time to come”. And, “it is going to be some years before the goals for inflation and unemployment are achieved.” It is “premature” to be considering withdrawal of monetary stimulus.
As other central banks have recently announced extensions of their bond purchases, if RBA were to cease bond purchases in April, ” it is likely that there would be unwelcome upward pressure on the exchange rate.” The decision to purchase an additional AUD 100B of bonds beyond April, as announced yesterday, would also “ensure a continuation of the RBA’s monetary support for the Australian economy.”
Lowe also reiterated that RBA doesn’t expect to raise interest rate before 2024, an “it is possible that it will be later than this.” “So the message is: interest rates are going to be low for quite a while yet. The Reserve Bank is committed to provide the support the economy needs as its recovers from the pandemic.”
