RBA's Debelle: Not convinced negative rates would work


The Reserve Bank of Australia's (RBA) Deputy Governor Guy Debelle was out on the wires Tuesday, stating lack of conviction in negative interest rate policy as a tool to boost inflation and employment. 

The central bank recently cut rates to a record low of 0.10% and has been buying bonds since the second quarter to contain the economic fallout from the coronavirus outbreak. 

Debelle said that the Australian dollar has seen a notable depreciation since the quantitative easing (bond buying) was first priced in by markets. However, the AUD/USD pair is currently trading at 0.7314, representing over 4% gains for the year. 

Key quotes

  • Don't see much risk of inflation rising too high in the next three years. 
  • There is lots of uncertainty on economy
  • There is long way to get back to pre-pandemic levels

RBA’s Debelle: Do not see too much upward pressure on house prices

RBA’s Debelle: Does not expect a rate hike for three years

 

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