On Monday, the Reserve Bank Governor announced a series of initiatives to boost liquidity in financial markets and that additional policy initiatives will be outlined at 4pm tomorrow.
Yesterday’s board minutes provided further support to Westpac’s view that a further 0.25 per cent reduction in the cash rate can be expected, following the cut from 0.75 per cent to 0.5 per cent earlier this month due to concerns about the impact of COVID-19 on the Australian and global economy.
A cash rate of 0.25 per cent is almost certain to be the “effective lower bound” as set out by the Governor in a speech on November 26.
In addition, the Bank’s much awaited quantitative easing will also be announced, most likely targeted at the risk-free yield curve effectively setting a price rather than nominating a quantity of purchases as has been used by the FOMC in the United States.
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