Minutes of RBA’s February 2 meeting noted that a number of major central banks had already announced extensions of their QE program. There was also a widespread expectation for RBA to extend its own. Hence, “if the Bank were to cease bond purchases in April, it was likely that there would be unwelcome significant upward pressure on the exchange rate.”
Outlook for the economy also indicated that it would be “some years before the goal of inflation and unemployment were achieved”. Hence, RBA decided to purchase an additional AUD 100B of Australian Government and states and territories after the current program completes in April.
On interest rate, the minutes reiterated that a negative policy rate is “extraordinarily unlikely”. Cash rate would be maintained at 10 basis points for “as long as necessary”. The conditions for a rate hike are not expected to be met “until 2024 at the earliest”.
