VIEW: ANZ note that "while fiscal policy has....>

RBA: VIEW: ANZ note that "while fiscal policy has taken primacy, monetary policy

still has a role. By the middle of next year, we think the RBA will still be

forecasting only very gradual progress toward its inflation and unemployment

objectives. We doubt it will sit on autopilot, given such an outlook.

- Two policy options recommend themselves:

- an extension of the TFF;

- moving to a hybrid YCC/QE model, targeting the 3y at 0.25% but also specifying

a quantity of longer-dated bonds to buy in order to flatten the yield curve.

- A stronger AUD that is seen as dampening the economic recovery could be a

market trigger for additional RBA action. The RBA's policy of yield curve

control (YCC) contrasts with that of other central banks, and we think it is

putting upward pressure on the AUD. At this stage, we don't see the AUD move as

sufficient to force the RBA to reconsider its approach. But this could change

quickly and see the RBA adjust policy sooner than we currently expect. Indeed,

if the AUD continues to rally at its current pace then we might reach a level

that the RBA is uncomfortable with quite soon."