RBA eyeing formal change towards unwinding unconventional policy in July – BofA
Analysts at Bank of America Global Research (BofA) provides insights into the Reserve Bank of Australia’s (RBA) July 6 monetary policy meeting.
Key quotes
"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,"
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
