The Reserve Bank has signalled it may buy more government debt to drive interest rates lower, warning the Australian economy faces a 'gradual and uneven' recovery out of the coronavirus recession | swrighteconomy
The Reserve Bank has signalled it may buy more government debt to drive interest rates lower, warning the Australian economy faces a "gradual and uneven" recovery out of the coronavirus recession.
RBA deputy governor Guy Debelle has revealed the bank may buy more government bonds to drive down long term interest rates.The bank has already cut official interest rates to a record low and bought public debt on the secondary market to drive down the costs on three year government bonds. Apart from taking rates down, such a move would also encourage investors to buy assets that may be based overseas which in turn would help bring down the value of the Australian dollar.Dr Debelle said direct intervention in the foreign currency market was also an option given it could boost the economy.
Dr Debelle said the RBA believed the economy was not going to recover from the coronavirus recession quickly."As the outlook for the Australian economy unfolds, the board will continue to assess the merits of the range of monetary options to best support the economic recovery."
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