MNI BRIEF: RBA pondered more yield control before choosing QE

The Reserve Bank of Australia considered extending its yield control program for Government bonds to longer dated bonds, but instead decided on a program of Quantitative Easing at its November Board meeting, according to minutes released today.

At the meeting the RBA decided on a AUD100 billion QE program for longer dated bonds in addition to maintaining its yield control program targeting the benchmark Australian Government three yield bond.

"Members judged that a yield target is most effective when its maturity is consistent with the Board's forward guidance on the cash rate," the minutes said. The bank has said it is unlikely to raise rates for "at least the next three years."

The RBA also lowered official interest rates to a record low 0.10% at the meeting, and the minutes confirm the central bank's view that rates have now "been lowered as far as it made sense to do so in the current environment."