TechnoclinicTechnoclinic
  • Home
  • APPS
  • CAMERAS
    • PRINTERS
  • GAMING
    • LAPTOPS
  • HDTV
  • NEWS
  • PHONES
    • TABLETS
  • REVIEWS
  • SOFTWARE
  • Contact Us!
Search
© 2022 Foxiz News Network. Ruby Design Company. All Rights Reserved.
Reading: Reserve Bank gets the money printers ready
Share
Sign In
Aa
TechnoclinicTechnoclinic
Aa
Search
  • Home
  • APPS
  • CAMERAS
    • PRINTERS
  • GAMING
    • LAPTOPS
  • HDTV
  • NEWS
  • PHONES
    • TABLETS
  • REVIEWS
  • SOFTWARE
  • Contact Us!
Have an existing account? Sign In
Follow US
© 2022 Foxiz News Network. Ruby Design Company. All Rights Reserved.
Technoclinic > PRINTERS > Reserve Bank gets the money printers ready
PRINTERS

Reserve Bank gets the money printers ready

Loknath Das
Last updated: 2019/11/12 at 6:11 AM
Loknath Das
Share
SHARE

The Reserve Bank of Australia is edging closer towards deploying unorthodox monetary stimulus such as buying government bonds, and the bank has announced that governor Philip Lowe will dedicate a speech to the topic.

Dr Lowe will speak on “Unconventional monetary policy: some lessons from overseas” at the Australian Business Economists dinner in Sydney on November 26, the RBA has said.

Philip Lowe will deliver a speech related to QE later this month.  Louie Douvis

The RBA is close to exhausting its traditional interest rate ammunition and is considering quantitative easing, a form of central bank money printing.

The cash rate is at a record low of 0.75 per cent and the bank conceded on Friday that it was more than two years away from lifting inflation back into its 2-3 per cent target and hitting its informal unemployment goal of 4.5 per cent.

The chances of another rate cut in March have been priced in about 50 per cent by financial markets.

IFM Investors chief economist Alex Joiner said the coming speech by Dr Lowe would “garner a lot of market interest as the bank searches for policy options” such as so-called quantitative easing (QE).

“Most people think the RBA has one or maybe two rate cuts left before it has to consider the unconventional,” Dr Joiner said.

“It must have that contingency up its sleeve and the RBA wants to present that possibility much more formally.

“You would hope this speech would crystallise the willingness of government fiscal policymakers to step in to support the economy before QE.”

Central banks in the United States, United Kingdom, Europe and Japan have resorted to QE since the 2008 global financial crisis.

Under the process of QE, central banks create money and buy assets in financial markets such as government bonds, or in the case of Japan listed equities, to drive down long-term bond yields and increase the appetite for risk assets.

Dr Lowe has previously said the most plausible form of QE in Australia would be buying government bonds to lower the “risk-free” interest rate to influence borrowing costs across the economy and to put downward pressure on the Australian dollar.

He said in September that unconventional monetary tools were “unlikely” but “possible” in Australia.

That assessment appeared to change last week when the RBA’s statement on monetary policy said that “rates were already very low and that each further cut brings closer the point at which other policy options might come into play”.

JPMorgan economist Ben Jarman said Dr Lowe’s coming speech was likely to reiterate the bank’s September parliamentary testimony that a “package” of measures was most effective, such as buying government bonds and pledging to keep rates low for an extended period – a pledge known as “forward guidance”.

Tools of unconventional policy

In detailed written responses to a parliamentary committee, the RBA outlined six forms of unconventional policy that had been used overseas.

The tools included buying government bonds, providing cheap longer-term funding to banks to lend to households and business, foreign exchange intervention to drive the currency lower and purchasing private sector assets, such as mortgage-backed securities, corporate bonds and equities.

Dr Lowe has said one tool – negative interest rates – was extraordinarily unlikely in Australia.

Economists believe the lower bound of the cash rate is 0.5 per cent or 0.25 per cent, because at very low interest rates, commercial bank profit margins get squeezed and they will pass on less of the RBA cash rate cuts.

JPMorgan economists said this week that the RBA was likely to cut rates in February, leaving the door “wide open” for unconventional policy in late 2020.

The investment bank believes the package will include purchasing up to $50 billion of Australian federal government bonds and continued use of forward guidance.

As the RBA runs out of room to cut interest rates, Dr Lowe has repeatedly called for government fiscal policy, such as infrastructure spending, to help stimulate the economy.

The Morrison government is committed to delivering a budget surplus this financial year.

The bank and government are aware that falling interest rates could hurt consumer confidence.

“It also took into account the possibility that further easing could unintentionally convey an overly negative view of the economic outlook, or that the usual channels of policy transmission might be less effective at low interest rates,” the RBA said on Friday.

“That said, the board still assessed that lower rates would support the economy via lower exchange rate, higher asset prices and a boost to aggregate household disposable income.”

[“source=afr”]

TAGGED: Bank, Gets, Money, Printers:, Ready, Reserve, The

Sign Up For Daily Newsletter

Be keep up! Get the latest breaking news delivered straight to your inbox.
[mc4wp_form]
By signing up, you agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.
Loknath Das November 12, 2019
Share this Article
Facebook Twitter Copy Link Print
Share
Previous Article Top Windows 10 powered laptops you can buy
Next Article Facebook is fixing a bug that turned on phone cameras

Latest News

Case Study: Nissan and Teads’ Immersive Concept Car Campaign Transformed Scrolls into Stories
NEWS
Review of Hootsuite: Advantages, Drawbacks, Features, and Other Options
REVIEWS
From Idea to Launch: The Software Development Journey
SOFTWARE
How schools can save money and work more efficiently with managed print services
PRINTERS
How to Write Powerful Blog Posts, Comparisons, and Reviews
REVIEWS
How to Defrost Your Lens with Condensation
CAMERAS

Most Viewed Posts

  • Choosing the Right Tablet for Blogging and Writing On the Go (1,043)
  • What You Need to Know About Smartphones vs. Tablet use of the Mobile Internet (993)
  • How to Start a Product Review Blog (Templates & Examples) (989)
  • How To Start A Review Blog and Get Free Review Products (986)
  • App Annie now tracks 5,000 Android apps in China: Report (981)

© 2023 TechnoClinic Network. TechnoClinic Company. All Rights Reserved.

Removed from reading list

Undo
Welcome Back!

Sign in to your account

Lost your password?