Latest monetary policy decision by the RBA – 4 May 2021
- Prior 0.10%
- 3-year bond yields target 0.10%
- At its July meeting, RBA to consider whether to retain the April 2024 bond as the target bond for the 3-year yield target or to shift to the next maturity, the November 2024 bond
- RBA not considering change to the target of 10 basis points
- At the July meeting, RBA will also consider future bond purchases following the completion of the second $100 billion of QE purchases
- Global economic recovery remains uneven
- Australian recovery has been stronger than expected and is forecast to continue
- A pick-up in inflation, wages is expected but likely to be only gradual and modest
- RBA will be monitoring trends in housing borrowing carefully
- Australian dollar remains in the upper end of the range of recent years
- RBA committed to maintaining highly supportive monetary conditions
- RBA will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range; this is unlikely to be until 2024 at the earliest
- Full statement
No changes to key policy with the only key takeaway being that the RBA is putting a firm timeline on its decision to shift the yield curve control focus. That said, the July meeting is when they will “consider” but given such communication, it is preempting the market that they should make a decision to shift to November 2024 bonds then.
Besides that, there isn’t much else as the RBA reaffirms its pledge to keep easy policy in place and also saying that they can do more if needed with regards to QE.
AUD/USD had a 10-pip whipsaw but is keeping lower again at 0.7745 – little changed from before the decision/statement was released.