Christopher Kent, Assistant Governor (Financial Markets) at the Reserve Bank of Australia Q&A
- Have the opportunity to see how economy reacts to past hikes
- No current plans to step up the pace of bond holdings
- If we were to sell bonds, would do it in a way that would not disturb markets
- There are pockets of fast wage growth, but contained in aggregate
- The CPI data will be important but it is not the only consideration for policy
Kent spoke earlier:
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As background to what Kent is talking about re bonds:
- In its long-dated outright transactions, the Reserve Bank purchases government securities with terms to maturity generally greater than 18 months.
- Prior to March 2020, the Reserve Bank typically undertook these transactions on a quarterly basis, and in relatively small quantities, to replenish the holdings of securities used for liquidity management purposes.
- Following a series of decisions taken by the Reserve Bank Board since March 2020, the Reserve Bank for a time purchased government securities for monetary policy purposes. Australian Government Securities (AGS) were purchased to support a target for the yield on an Australian Government bond further out the yield curve than the cash rate – the yield target was discontinued on 2 November 2021.
- The Bank also purchased AGS and semi-government securities (semis) as part of a bond purchase program to lower longer-term yields and, if required, to address market dislocations.
- On 1 February 2022 it was announced that purchases under the bond purchase program would cease after 10 February 2022.
