The reserve bank kept the official cash rate at 0.1 percent and kept the size and parameters of its $ 200 billion program to buy quantitative easing bonds

The central bank said it “pulled forward” some bond purchases this week to restore the functionality of the bond market, which saw a sell-off last week

“Bond purchases under the bond purchase program were brought forward this week to support the smooth functioning of the market,” said Governor Philip Lowe in his statement

“The bank is ready to further adjust its purchases according to market conditions”

The bank said it would be “very supportive” of monetary conditions and that the board of directors still didn’t expect the cash rate to rise “until 2024 at the earliest.”

On Monday the central bank doubled the volume of its daily bond purchases of 2 billion USD to 4 billion USD This followed last week’s bond sell-off that raised the 10-year bond yield up to 1.95 percent

Some market participants observed whether the bank would scale up its entire QE program or buy longer-term bonds

However, the bank said it had decided to stick to its targets, including 10 basis points for the rate and yield on the three-year Australian government bond, as well as the parameters of the term finance facility and government bond purchase program

According to the RBA’s statement on Tuesday, the ten-year bond rose slightly to 1,686 percent from 1,676 percent prior to the announcement
So far, the central bank has purchased $ 74 billion in government bonds issued by the Australian government and states and territories under the central bank’s original $ 100 billion program

In February, the RBA extended its bond-buying program for another $ 100 billion despite improving its employment and inflation forecasts

Dr Lowe said the board of directors remains committed to maintaining monetary conditions until its goals are achieved ”

The central bank has repeatedly announced that it will keep the key interest rate target at 0.1 percent until the actual, unpredicted inflation, inflation was “sustainable” in the range of 2 to 3 percent

The RBA is expected to hold approximately $ 221 billion worth of government bonds, or roughly 25 percent of the total outstanding nominal bond market, by the end of August

The RBA acknowledged that the surge in bond yields in the US was due to an improvement in economic conditions and the inflation outlook

“The positive news about vaccines and the prospect of further significant fiscal stimulus in the US have resulted in longer-term bond yields rising significantly over the past month”

“This increase partly reflects a medium-term increase in expected inflation to interest rates closer to central bank targets”

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World news – AU – RBA is keeping your nerve on interest rates and bond purchases