VIEW: Westpac note that "the choice of the......>

RBA: VIEW: Westpac note that "the choice of the three year bond target rate as

the same as the cash rate target is strategic since it sends a clear message

that if the Bank is prepared to purchase three year bonds at the overnight cash

rate it is reasonable to expect that it is comfortable with the cash rate

holding at 0.25% for the full three years. This does not mean that it cannot

lift the rate for the bond yield target. A higher target rate would imply that

the Bank now expects the cash rate to be lifted within the three year window

therefore signalling an appropriately tighter monetary policy. A lift in the

target rate would see the market's timing for the cash rate increase brought

forward and the arbitrage between swap markets and the bond rate would pin point

that expected timing."