RBA’s Lowe Rejects QE Scenario

RBA has cut rates three times this year and markets are expecting more easing. But RBA's Lowe rejects QE right now

Written by: Skerdian Meta • Tuesday, November 26, 2019 • 1 min read

• Last updated: Tuesday, November 26, 2019

The global economy has weakened considerably and many major central banks have turned dovish, cutting interest rates several times. The European Central Bank started another QE (quantitative easing) programme this month.

The Reserve Bank of Australia has cut interest rates three times already. But, RBA chairman Lowe rejects a QE scenario in Australia.

0.25% is the effective lower bound for rates
QE could include purchase of state government bonds
Expects employment growth to be slow but still be reasonable
Not particularly worried by rising house prices at the moment
A long way from QE scenario happening
There are a lot of positives in the economy
The important thing is to get inflation moving in the right direction
It is going to take a long time for wages to translate to inflation

Lowe does mention QE and the option of buying government bonds, but he also states that “QE is a long way from happening”. But, he also states that 20% might be coming soon. Markets are anticipating a 25 bps rate cut next year, but if things deteriorate, we might have more than one cut and even QE. Although, hopes are that the partial trade deal should improve the economic situation globally and particularly for Australia, since China is the main export market for Australia.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.