Following are the key headlines from the November RBA monetary policy statement, via Reuters, as presented by Governor Phillip Lowe.
Do not expect to raise the cash rate for at least three years
Decided on a package of further measures to support job creation and the recovery of the Australian economy from the pandemic
Board is prepared to do more if necessary.
Package includes the purchase of $100 billion of government bonds of maturities of around 5 to 10 years over the next six months
Under the program to purchase longer-dated bonds, the bank will buy bonds issued by the Australian government and by the states and territories
Monetary and fiscal support will be required for some time
Bonds will be bought in the secondary market through regular auctions, with the first auction to be held this Thursday
The bank remains prepared to purchase bonds in whatever quantity is required to achieve the 3-year yield target
Wages growth will have to be materially higher than it is currently to reach inflation target
Any bonds purchased to support 3-yr target would be in addition to the $100 billion bond purchase program
To keep the size of the bond purchase program under review
Positive GDP growth is now expected in the September quarter, despite the restrictions in Victoria
In the central scenario, GDP growth is expected to be around 6 per cent over the year to june 2021 and 4 per cent in 2022
It will take some time to reach the pre-pandemic level of output
The unemployment rate is expected to remain high, but to peak at a little below 8%
Lower interest rates across the yield curve will contribute to a lower exchange rate than otherwise
At the end of 2022, the unemployment rate is forecast to be around 6%
This extended period of high unemployment and excess capacity is expected to result in subdued increases in wages and prices over coming years
In underlying terms, inflation is forecast to be 1 per cent in 2021 and 1½ per cent in 2022
more to come …
About RBA rate decision
RBA Interest Rate Decision is announced by the Reserve Bank of Australia. If the RBA is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view on the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.
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