MNI BRIEF: RBA Considered Keeping AUD5bn Weekly Bond Purchases

The Reserve Bank of Australia considered maintaining its bond purchases at AUD5 billion a week and then review the program in November, but instead decided to extend the program at AUD4 billion a week until February to give greater clarity to the market into 2022.

The option was revealed in the minutes of the RBA Board's September meeting released on Tuesday, which also shows the board took into account that many other central banks are tapering bond purchases and that – at AUD4 billion a week until February – the RBA purchase program is "expanding faster relative to the stock of bonds outstanding than that of other central banks."

The minutes show the RBA continues to believe that the Delta driven lockdowns have de-railed but not delayed Australia's economic recovery, and that the economy would be back to its pre-Delta path by mid-2022. Given this view, the RBA Board believe that "tapering remained appropriate" and opted for lower weekly bond purchases from September.