Analysts at Bank of America Global Research (BofA) provides insights into the Reserve Bank of Australia’s (RBA) July 6 monetary policy meeting.
“The RBA will update policy guidance at the 6 July Board meeting. Governor Lowe will hold a press conference, as was the case when yield curve control was unveiled last March and quantitative easing (QE) was introduced in November.”
“So this is a formal change of direction. It seems almost certain the 3-year yield target will not be extended beyond Apr-2024, but the RBA now looks likely to adopt a more flexible and data-dependent approach to extending QE.”
“Considerable stimulus will likely remain in place. A more open-ended third round to QE is more likely to commence at the current pace of AUD5bn per week where RBA purchases would reach AUD60bn after 3 months. An extension of QE would help to keep net ACGB supply negative in the new fiscal year and help to temper 10yr swap spread tightening,”