The Reserve Bank of Australia (RBA) reiterated its commitment to keep interest rates at a low level as policymakers sought to stop the increase in bond yields from disrupting the economic recovery.
As is the case in the United States at the moment which has seen long-term bond yields increase significantly over the past month, the RBA is also aware of similar movements in the Australian bond market.
As such, the central bank is committed to staying within the 3-year yield target and bond purchases under the bond-buying program were introduced this week to help smooth the market.
According to the central bank, monetary policy arrangements have helped the economy by maintaining very low financing costs, contributing to lower exchange rates than others.
The central bank also expects continued recovery, with the main scenario being Gross Domestic Product (GDP) increasing by 3.5% in 2021 and 2020. GDP is expected to return to the end of 2019 by the middle of this year.
In addition, the central bank also estimates that the unemployment rate will still be around 6% at the end of this year and 5.5% at the end of 2022. Basically, inflation is expected to increase by 1.15% in 2021 and 1.5% in 2022.
Concluding the policy meeting for March, the RBA maintained its interest rate at 0.10% and stressed that its targets for employment and inflation will not be achieved by at least until 2024.
