Following are the key headlines from the March RBA monetary policy statement (via Reuters):
Exchange settlement balances at the reserve bank will be remunerated at 10 basis points, rather than zero as would have been the case under the previous arrangements.
To buy govt bonds in secondary market across yield curve.
Purchases will commence on Friday.
Australia's financial system is resilient and well placed to deal with the effects of the coronavirus.
Working closely with the other financial regulators and the Australian government to help ensure that Australia’s financial markets continue to operate effectively.
The functioning of major government bond markets has been impaired.
At some point virus will be contained and economy will recover.
Will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target band.
Three-year funding facility to authorised deposit-taking institutions (ADIs) at a fixed rate of 0.25 per cent.
This facility is for at least A$90 billion.
Government has also developed a complementary program of support for the non-bank financial sector.
Policy steps complement government fiscal measures.
Will undertake multi-price auctions for government securities.
To offer three-year funding (TFF) to authorised deposit-taking institutions.
Banks will have access to additional low-cost funding if they expand their lending to businesses.
TFF will provide funding to ADIs at an interest rate of 25 basis points, fixed for the term of the funding.
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