VIEW: RBA Won't Change Course Under Low Visibility

J.P.Morgan note that "RBA officials soon resume communications after the summer hiatus; we don't expect material shifts in stance, with the Governor to emphasize that the recovery is "unpredictable and uneven." The economy is yet to prove resilience in the absence of government support (JobKeeper, etc). That uncertainty will postpone the dropping of YCC, since the 3Y target reflects the board's level of visibility over the path for the cash rate We continue to expect extension of QE, and for YCC to last until late-2021; the objectives of labour market repair and quantity-matching other central banks won't be met by April."

• "It does not make sense to fear withdrawal of YCC, given i) the RBA's criteria for hikes (actual inflation sustainably in the target band, ii) the likely sequencing of exit (excess liquidity remains for years), and iii) the large concession already built into the front-end of the curve Nor does it make sense to drop TFF a long time before dropping YCC, since this implies mortgage rates are less important than the cash rate."