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RBA’s Lowe Sending AUD Tumbling Lower, After Rate Cut Comments

Posted Thursday, October 15, 2020 by
Skerdian Meta • 2 min read

The Australian Dollar has been one of the most bullish currencies out there since March. China, which is the main market for Australian exports, has left the coronavirus behind, while the virus in Australia is being kept under control, with the number of infections remaining pretty low, compared to the rest of the world.

But Australia has been strengthening restrictions, and the Reserve Bank of Australia (RBA) is thinking about easing the monetary policy again, as RBA chairman Lowe said yesterday. Below are his comments:

we are committed to do what we reasonably can, with the tools we have, to support the recovery
the board will not be increasing the cash rate until actual inflation is sustainably within the target range
it is not enough if inflation is merely forecast to be in the target range
it is reasonable to expect that further monetary easing would gain more traction than was the case earlier
we do not expect to be increasing the cash rate for at least three years
we have been considering what more we can do to support jobs, incomes and businesses in Australia, in order to help build that important road to the recovery
the board has not yet made any decisions
to the extent that an easing of monetary policy helps people get jobs, it will help private sector balance sheets and lessen the number of problem loans
recovery of the Australian economy is now underway, and we can look forward to this continuing

Once again Lowe is urging further fiscal support and he is not ruling out that his bank could provide further monetary support. He is signalling that he will be doing more, for example:

“Our balance sheet has increased considerably since March, but larger increases have occurred in other countries. We are considering the implications of this, as we work through our own options.”

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