RBA Steers Clear of Comments on China, Housing Mkt, AUD

By Sophia Rodrigues

The Reserve Bank of Australia left its policy settings unchanged and acknowledged that the depth of the downturn will be less than previously expected, but still pointed to uncertain outlook.

Importantly, the RBA once again steered clear of any comment on China, the housing market or the exchange rate. There was also no hint of any easing bias though that doesn’t mean the RBA will not lower the cash rate target further or do large-scale asset purchases in the months ahead.

Following are the highlights from the statement:

--The RBA left the cash rate target and the target on 3-year government bonds unchanged at 0.25%.

--The RBA said it is possible that the depth of the downturn will be less than earlier expected but the outlook, including the nature and speed of the expected recovery, remains highly uncertain and the pandemic is likely to have long-lasting effects on the economy. 

-- The RBA said its market operations are continuing to support a high level of liquidity in the Australian financial system and it expects further use of the Term Funding Facility by banks over coming months.

-- The RBA is prepared to scale-up its bond purchases again and will do whatever is necessary to ensure bond markets remain functional and to achieve the yield target for 3-year AGS. 

--The RBA noted there has been a pick-up in some forms of consumer spending

--The RBA said its actions are keeping funding costs low and supporting the supply of credit to households and businesses. This accommodative approach will be maintained as long as it is required. 

--Contact: Sophia@centralbankintel.com