MNI BRIEF: End Of QE Is Not Tightening, Says RBA Governor Lowe

The end of the Reserve Bank of Australia’s bond buying program “does not represent a tightening of monetary policy,” according to RBA Governor Philip Lowe.

In a speech to the National Press Club on Wednesday, Lowe said that by mid-February – when the RBA will end its bond buying program – the central bank will have purchases over AUD350 billion of Government bonds and tripled its balance sheet to AUD650 billion, see: MNI STATE OF PLAY: RBA Stays Firm On Cash Rate View, Drops QE.

Lowe said the bank had not made any decision on reinvesting the proceeds of maturing bonds and would consider this at its May meeting and be guided by the state of the economy.

He said that the large gaps in the maturing profile meant the bank had more time to decide, as unlike some other countries there were not maturities of government bonds every week or month. The RBA holds an average of around 40% of all bonds on issue on series out to December 2030, but this percentage falls away after that to below 10% for the April 2033 series.