Board Discussed Three Options For Future Of QE Ahead Of February Meeting

RBA Governor Philip Lowe speaks to CPA Australia Riverina Business Conference in Wagga Wagga:

• The Governor says that the Board will debate the future of the QE programme at its next meeting in February. Policymakers held a preliminary discussion of three options at their meeting last week, with all based on the assumption that the economy does not suffer any serious setback:
  1. "The first option discussed was to further taper the bond purchases from the current rate of $4 billion a week, with an expectation that the purchases would come to an end in May."
  2. "The second was to taper further and then review the situation again in May"
  3. "The third option was to cease bond purchases altogether in February."
• "In deciding between these options, the Board will use the same three criteria that it has used since the outset: the actions of other central banks, how the Australian bond market is functioning, and most importantly, the actual and expected progress towards the goals of full employment and inflation consistent with the target."
• "The second point that I want to make is that the Reserve Bank Board will not increase the cash rate until actual inflation is sustainably in the 2–3 per cent target range. We are still a fair way from that point. In our central scenario, the condition for an increase in the cash rate will not be met next year. It is likely to take time for that condition to be met and the Board is prepared to be patient."
• Click here to see the full text of the speech or listen to it live. Remarks on monetary policy can be found in the last section of the speech.