The Bank of Australia hints that it may end quantitative easing in February
The Governor of the Bank of Australia, Philip Low, said that the Reserve Bank of Australia may end its asset purchase program as early as February, which is the latest move by global central banks to tighten monetary policy.
Lowe said on Thursday that the Reserve Bank of Australia’s quantitative easing program-buying government bonds at a rate of 4 billion Australian dollars ($2.9 billion) per week-was one of three options discussed at the most recent board meeting.
But Luo said that he is not in a hurry to raise interest rates, and any move to stop purchasing assets will not affect the timing of the decision. “We think these two decisions are completely separable,” he said.
Lowe said at an accountants forum in Wagga Wagga, New South Wales, that if progress is made in employment and employment, one option is to end the Bank of Australia’s asset purchases in February. Inflation target Faster than expected.
Other possibilities are to reduce purchases and end in May, or to reduce purchases in May and review the plan based on whether economic progress meets the November forecast or slowing down.
“If progress is better than expected in achieving the board’s goals, then there will be more reasons to stop buying bonds in February,” Lowe added.
After new data shows a sharp rebound in the labor market, the plan seems more likely to end early.
The Australian November Labour Force Survey, released after Lowe’s speech, showed that the number of employed people increased by 366,100. This reduced the unemployment rate from 5.2% in October to 4.6%.
The labor force participation rate rose to 66.1%, close to the record of 66.3%.
The labor market data exceeded the November forecast by the Bank of Australia, which expects the unemployment rate to be slightly below 5% by the end of the year.
RBA started its quantitative easing program in November 2020, much later than other central banks because Unwilling to do this Before succumbing to the risk of exchange rate appreciation.
“We are deeply affected by other central bank actions,” Lowe said in a question-and-answer session after the speech.
The Fed said on Wednesday that it will reduce its scale at a faster rate, which may be a factor in the decision of the Bank of Australia in February. “On the edge, if they [other central banks] Stop doing this and it will increase the likelihood that we will do the same,” Lowe said.
Lowe said that the decision will be based on further interpretations of the impact of inflation, the labor market, economic spending, and the Omicron coronavirus variant.
Lowe said that Omicron represents downside risks, but he expects the positive economic momentum to continue throughout the summer, thanks to the end of the lockdown, high vaccination rates, important fiscal and monetary support, and strong household and business balance sheets.
However, he said that raising interest rates may take time because the economy is “quite far away” from the point where inflation can continue to fall within the RBA’s target range of 2-3%.
Road to recovery
What you need to know about business and economics after the pandemic. register. Register here