Australia: RBA announces a rate cut and QE – Westpac
The Reserve Bank of Australia (RBA) has announced a rate cut; QE and Term Lending while Treasury has announced the purchase of asset backed securities, economists at Westpac Institutional Bank brief.
“The cash rate target has been reduced from 0.5% to 0.25%. Furthermore, it will not be increased until progress has been made towards full employment and inflation is sustainably within the 2–3% target band.”
“The RBA has now adopted QE. However, instead of nominating a volume of bond purchases, it has nominated a target yield for the three year Australian government bond rate of ‘around 0.25%’.”
“Westpac is particularly pleased to see that the RBA is offering a term funding facility for the banking system.”
“These initiatives will not affect the Bank’s ongoing provision of liquidity to Australian financial markets through repo operations which have recently been extended to six month maturities or longer.”