Governor Lowe Reaffirms RBA Stance Despite Recent Market Moves

Key snippets from RBA Governor Lowe's address at the AFR Business Summit:

• "Over the past couple of weeks market pricing has implied an expectation of possible increases in the cash rate as early as late next year and then again in 2023. This is not an expectation that we share."
• "Our judgement is that we are unlikely to see wages growth consistent with the inflation target before 2024. This is the basis for our assessment that the cash rate is very likely to remain at its current level until at least 2024."
• "Consistent with the judgement that the condition for an increase in the cash rate is unlikely to be met before 2024, the Bank remains committed to the 3-year yield target. We are not considering removing the target or changing the target from 10 basis points."
• "The Board has, though, discussed the question of whether to keep the April 2024 bond as the target bond, or to move to the next bond – that is the November 2024 bond – later this year. If we were to keep the April 2024 bond as the target bond, the maturity of the yield target would gradually decline as time passes until the bond finally matures in April 2024. The Board has not yet made a decision on this question and will consider it again later in the year when it has more information about the economic recovery and the labour market."
• "Later in the year, the Board will also consider the case for further extending the bond purchase program. We are prepared to undertake further bond purchases if that is required to reach our goals. Until then, we remain prepared to alter the timing of purchases under the current programs in response to market conditions. We did this last week when liquidity conditions deteriorated and bid-ask spreads widened noticeably, and will do so again if necessary."
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