Christopher Kent, Assistant Governor (Financial Markets) at the Reserve Bank of Australia Q&A

  • Have the opportunity to see how economy reacts to past hikes
  • No current plans to
    step up the pace of bond holdings
  • If we were to sell
    bonds, would do it in a way that would not disturb markets
  • There are pockets of fast wage growth, but contained in aggregate
  • The CPI data will be important but it is not the only consideration for policy

Kent spoke earlier:

As background to what Kent is talking about re bonds:

  • In its long-dated outright transactions, the Reserve Bank purchases government securities with terms to maturity generally greater than 18 months.
  • Prior to March 2020, the Reserve Bank typically undertook these transactions on a quarterly basis, and in relatively small quantities, to replenish the holdings of securities used for liquidity management purposes.
  • Following a series of decisions taken by the Reserve Bank Board since March 2020, the Reserve Bank for a time purchased government securities for monetary policy purposes. Australian Government Securities (AGS) were purchased to support a target for the yield on an Australian Government bond further out the yield curve than the cash rate – the yield target was discontinued on 2 November 2021.
  • The Bank also purchased AGS and semi-government securities (semis) as part of a bond purchase program to lower longer-term yields and, if required, to address market dislocations.
  • On 1 February 2022 it was announced that purchases under the bond purchase program would cease after 10 February 2022.

Source: https://www.forexlive.com/centralbank/more-from-rbas-kent-if-we-were-to-sell-bonds-we-do-it-in-a-way-not-to-disturb-markets-20231011/