RBA Assistant Governor Christopher Kent’s comment in a webinar reinforced the case for further monetary easing at November 3 meeting. He noted that monetary easing could gain a bit more traction now as the economy was reopening, echoing previous comments by Governor Philip Low. Interest rates “could all go a little lower than they currently are”, referring to both the cash rate as well as the three-year yield target. While he declined to comment on whether RBA would extend the purchases of securities of longer maturity, he acknowledged that such a move could lower funding costs for both the governments and businesses.
Regarding fiscal position, Kent said that “debt of course will rise with deficits but that’s part of the very crucial fiscal support that we are seeing.” “The key is not to focus on the potential change in the ratings that come from rising debt. Instead focus on the fact that the rising debt is very manageable,” he added.