MNI BRIEF: RBA Likely To Continue QE, Says Board Minutes

The Reserve Bank of Australia is likely to continue buying government bonds when the current program concludes in September, with the bank saying in the latest minutes that it "would be premature to consider ceasing the program," an indication it believes that accommodative policy is still required for the economy to meet targets around inflation and full employment.

The RBA will decide at its July meeting whether to continue its bond buying program, the second AUD100 billion of which will end in September. The minutes show the RBA is looking at several options, from repeating another AUD100 billion in purchases, scaling back the amount purchased or spreading them over a longer period, or "moving to an approach where the pace of the bond purchases is reviewed more frequently."

Another option was ceasing purchases, although the minutes then say that this would be "premature." A decision will also be made in July on extending the yield target of 0.10% from the April 2024 government bond series to the November 2024 series. The minutes show that a "key consideration" in this decision will be an assessment of whether inflation - currently running at an annualised 1.1% - is likely to be within the RBA's 2% to 3% target band by 2024.