News – AU – Reserve Bank of Australia Announces Interest Rate Decision Dec. March known

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At its meeting today, the Board of Directors decided to keep the current policy settings, including the 10 basis point targets for the cash rate and yield on the 3-year Australian government bond, as well as the parameters of the term finance facility and government bond purchase program

The outlook for the global economy has improved in recent months due to the continued adoption of vaccines. While the road ahead is likely to remain bumpy and uneven, there are better prospects for a sustained recovery than it was a few months ago. World trade has picked up and commodity prices have risen in recent months. Nonetheless, the recovery remains dependent on the health situation and significant fiscal and monetary support. Inflation remains low and is below the central bank’s targets

The positive news on vaccines, as well as the prospect of further significant fiscal stimulus in the US, has resulted in longer-term bond yields rising significantly over the past month, this increase in part reflecting a medium-term rise in expected inflation on interest rates that is closer Given these global developments, there have been similar movements in Australian bond markets Changes in bond yields around the world have been linked to the volatility of some other asset prices, including exchange rates, with the Australian dollar remaining in the high end of the last few years

In Australia, the economic recovery is in full swing and stronger than expected. Employment has risen sharply and the unemployment rate has fallen gratifyingly to 6.4 percent. Retail spending has been strong and most households and businesses that have postponed repaying loans have Repayment now started The recovery is expected to continue, with the central scenario being that GDP will grow 3½ percent in both 2021 and 2022 GDP is expected to return to late 2019 levels by the middle of this year

Wage and price pressures are subdued and are expected to remain so for a few years The economy is still operating with considerable spare capacity and the unemployment rate remains higher than it has been for several years Further progress in reducing spare capacity is expected but it will take time until the labor market is tight enough to achieve wage increases that are compatible with the inflation target being met.In the central scenario, the unemployment rate will still be around 6 percent at the end of this year and at 5½ percent at the end of 2022. Underlying inflation is expected to be 1¼ by 2021 Percent and 1½ percent above 2022 CPI inflation is expected to rise temporarily as some COVID-19-related price cuts reverse

The current monetary policy framework continues to help the economy by keeping financing costs very low, contributing to a lower than usual exchange rate, and supporting the provision of credit and household and corporate balance sheets. Together, monetary and fiscal policies support the recovery of aggregate demand and the revival of employment

Lending rates for most borrowers are at record lows and house prices have risen across Australia recently. Home owner loan growth has accelerated, but investor and corporate loan growth remains weak, lending standards remain solid and so do it It is important that this also be the case in an environment of rising house prices and low interest rates

Remaining committed to the 3 year return target, the bank recently bought bonds to support the target and will continue to do so if necessary. Also, bond purchases under the bond purchase program have been brought forward this week to keep the market running smoothly The bank stands ready to adjust its purchases further in line with market conditions. So far, the original $ 100 billion program has purchased $ 74 billion in accumulated government bonds issued by the Australian government and states and territories An additional $ 100 billion will be purchased upon completion of the initial program and the bank stands ready to take additional action if necessary. Authorized Depositaries have $ 91 billion under the Term Financing Facility USD and have access to a further 94 billion Since early 2020, the RBA’s balance sheet has increased by around $ 175 billion

The board of directors continues to strive to support the monetary conditions until its goals are achieved.The board of directors will only increase the key interest rate when actual inflation is sustainably within the target range of 2 to 3 percent requires significant job gains and a return to a tight labor market The board expects these conditions to be met in 2024 at the earliest

Monetary Policy, Interest Rate, Central Bank

News – AU – Reserve Bank of Australia announces interest rate decision on March 2 March known
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Source: https://www.miragenews.com/reserve-bank-of-australia-announces-interest-521758/