Ex-RBA officials: RBA QT seen unlikely, would have little impact – MNI
…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for FREE REGISTER to read full post below containing analysis. In case of any error or you think you are not able to read the full post below, please email us at support#nehcap.com [lwa][/s2If] [s2If current_user_can(access_s2member_level1)]
Citing former Reserve Bank of Australia (RBA) policymakers, MNI reported on Tuesday, the central bank is highly unlikely to undertake any form of quantitative tightening (QT) in the near future, as it would need the RBA to sell a large portion of its portfolio of long-term Australian Commonwealth Government Bonds to slow the economy significantly while injecting unpredictable volatility into fixed-income markets.
“A sale of the RBA’s total portfolio of bonds would likely equate to a 30bp raise to the cash rate.”
“The RBA’s research suggests that the purchases had about the same effect of loosening policy 30bp. So we’re talking about the same impact as one more rate hike.”
“While the RBA will not likely execute QT anytime soon, it could review its policy upon the maturity of other pandemic stimulus measures, such as the Term-funding Facility. The size of the central bank’s balance sheet was material, at about 35% of total outstanding ACGBs.”
“The Board had agreed to hold its AUD300 billion portfolio until maturity but noted it would review the strategy in future.”
“I don’t see a burning need for them to shrink the balance sheet very quickly. Yes, it carries a little interest rate risk, but the central bank can do that.”
At the time of writing, AUD/USD is holding gains at around 0.6550, up 0.43% on the day.
[/s2If]
Nehcap Expert Advisor
The NEHCAP MT4 EA is high quality professional trading system geared to generate returns without using GRID or martingales. Each trade has strict risk per trade parameter. The pairs under management include EURUSD, GBPUSD, AUDCAD, AUDNZD,GBPAUD, EURAUD, EURCAD, CHFJPY and many more.
The system is trading live: LIVE ACCOUNT TRACKING
You can run it free. Apply for a free trial and track our account. Buy the system or use profit share mechanism to generate returns on your MT4.
Join Our Telegram Group
