By Swati Pandey
SYDNEY (Reuters) – Economists at National Australia Bank
NAB also expects the Reserve Bank of Australia (RBA) to announce outright bond purchases in the 5-10-year maturities, so as to lower longer-dated rates.
The economists expect these policy easing measures at either the Oct. 6 or Nov. 3 meetings of the RBA board.
The change in view follows a speech by Deputy Governor Guy Debelle earlier in the day in which he left the door ajar for further policy action.
“The RBA continues to signal further monetary easing is likely,” the NAB economists wrote in a note.
“While NAB remains of the view that further monetary easing will have only marginal impact on the economy, the RBA continues to signal that it will do what it can to support the recovery.”
Expectations of further policy easing sent the Australian dollar
The RBA had slashed interest rates to a record low 0.25% in an emergency meeting in mid-March to backstop the economy against the coronavirus crisis.
Australia is battling its first recession in almost three decades following the pandemic lockdowns, with the RBA expecting an “uneven and bumpy” recovery, despite the reopening of large parts of the country that reined in the spread of the disease.
Economists also expect further fiscal policy measures to be announced in a long-awaited federal budget, due on Oct. 6.
(Reporting by Swati Pandey; Editing by Kim Coghill and Clarence Fernandez)
