Australia central bank says revenue goal was dropping efficiency

Governor Philip Lowe of the Reserve Bank of Australia said the central bank decided to scrap the yield target on Tuesday because its efficacy had waned as the economy recovered and interest rate expectations altered.

“Given our forecasts, it is still entirely plausible that the first increase in the cash rate will not be before the maturity of the current target bond – that is, the bond with a maturity date of April 2024,” Lowe said in an opening statement at an online briefing after the RBA’s policy meeting.

“But it is now also plausible that a lift in the cash rate could be appropriate in 2023.” Lowe said the latest data and forecasts did not warrant a rate rise in 2022.

Earlier, the RBA left its cash rate at a record low of 0.1%, but dropped both a commitment to keeping bond yields low and its projection of no hike in interest rates until 2024.

Story by : Norvisi Mawunyegah