By Wayne Cole
SYDNEY, Nov 2 (Reuters) – Australia’s central bank on Tuesday took an important step toward withdrawing from extraordinary stimulus measures, abandoning the target of ultra-low bond yields and leaving open the possibility of an anticipated rise in yields. interest rates.
Following its monetary policy meeting in November, the Reserve Bank of Australia (RBA) kept its benchmark interest rate at a record low of 0.1%, but dropped its target of 0.1 % for government bonds of April 2024.
The central bank also omitted its earlier forecast that a rate hike was unlikely until 2024, reflecting improving economic conditions and the recent surprising inflation reading.
However, it will continue to buy government bonds at a rate of 4 billion Australian dollars (3 billion US dollars) a week until at least mid-2022, underscoring that inflation remains too low.
“The Council is prepared to be patient, with the central forecast that core inflation will not exceed 2.5% by the end of 2023 and that there will only be a gradual increase in wage growth,” it said in a short statement. the governor of the central bank, Philip Lowe.
The Reserve Bank of Australia has so far resisted calls to use interest rates to temper the market, arguing that it would only slow the economy and cost jobs, but Australia’s main banking regulator has tightened the rules. rules for granting loans.
“The macroprudential tightening will act as a brake on housing, and fiscal policy will also act as a drag,” said Frank Uhlenbruch, investment strategist at Janus Henderson.
“Our view is that the tightening profile that the market implies runs the risk of triggering a major slowdown throughout 2023,” he added. “Given these uncertainties, we expect the RBA to accelerate little by little, starting a tightening cycle from mid-2023.”
(Reporting by Wayne Cole; Editing by Sam Holmes; Translated by Flora Gomez)