SYDNEY: Australia only recently started its quantitative-easing program, yet the key question already confronting the central bank is when and how to taper bond purchases given the strong economic recovery.
The Reserve Bank of Australia (RBA) is set to keep its key interest rate and three-year bond yield target at 0.10% today, when the board holds its first meeting of the year.
It’s halfway through a six-month, A$100 billion (US$76.3bil) bond-buying program, and also is running a bank-lending facility as part of efforts to compress borrowing costs and contain the local currency.The nation’s labor market is recovering, sentiment is strengthening and households are cashed up, even before taking into account record-low borrowing costs.