Reserve Bank of Australia Keeps Existing Monetary Policy Unchanged
April 6, 2021
Australia’s Official Cash Rate had been cut three times last year, twice in March by a total of 75 basis points and most recently by a further 15 bps in November to a record low of 0.10%. That level was retained at today’s monthly policy review by the Reserve Bank of Australia Board. So were the 3-year sovereign debt yield target of 0.10% and the central bank’s quantitative policy settings. A released statement observes improved growth prospects but also persistent uncertainties and subdued wage and price pressures. Forward policy guidance remains extremely accommodative:
The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest.
Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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