MNI BRIEF: Yield Targeting In Future Unlikely, RBA's Lowe

Reserve Bank of Australia Governor Philip Lowe has conceded that the central bank is not likely to use its yield target strategy in the future, rating the probability of doing so again “as low.”

In a speech to the American Chamber of Commerce in Australia, Lowe commented on a RBA report released Tuesday which concluded that the bank’s “disorderly” exit from its yield target program in November 2021 “caused some reputational damage to the bank.”

The RBA on Tuesday released an internal review of the success of its yield target program, which saw the central bank buy three year government bonds with the aim of keeping the yield at 0.10% to match the record low level in official interest rates. The RBA abandoned the yield target after yields on the bonds surged to 0.8% under sustained pressure from the market, (See: MNI: RBA Reviews Set To Kick Off On Policy, Targets).

Lowe said that better communication from the RBA could have “eased the situation” as the target lost credibility.