RBA’s Lowe says negative policy rate in Australia is “extraordinarily unlikely”
A negative policy rate in Australia is "extraordinarily unlikely", Reserve Bank of Australia (RBA) Governor Phillip Lowe said at the post-monetary policy meeting press conference on Tuesday.
Lowe, however, added that the RBA is "not out of firepower" after the latest policy easing.
Additional quotes
If we need to do more, we can and we will" on bond purchases.
Other tools include further liquidity provision, asset purchases, transactions in currency market.
Little to be gained from lowering policy rate into negative territory.
Higher Australian bond yields have put some upward pressure on A$.
Bond buying to lower borrowing costs and A$, lift asset prices.
Board considered targeting longer yield – say five years – but decided against it.
RBA is not financing government spending; debt will have to be paid back by govt.
Pandemic to have long-lasting economic effects, sharp bounce-back in jobs is unlikely.
Board views addressing high rate of unemployment as a national priority.
Responsibility for job creation falls mainly on shoulders of business and government.
Expects slow job creation, unemployment rate around 6% at end of 2022.
Expects annual wages growth of less than 2% in each of next two years.
Market reaction
AUD/USD sticks to daily lows near 0.7030 on the above comments, as markets trade with caution on the US election day.
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.
