More from RBA's Kent: If we were to sell bonds, we'd do it in a way not to disturb markets
<p> Christopher Kent, Assistant Governor (Financial Markets) at the Reserve Bank of Australia Q&A </p><ul><li>
Have the opportunity to see how economy reacts to past hikes</li><li>No current plans to
step up the pace of bond holdings</li><li>If we were to sell
bonds, would do it in a way that would not disturb markets</li><li>There are pockets of fast wage growth, but contained in aggregate</li><li>The CPI data will be important but it is not the only consideration for policy</li></ul><p>Kent spoke earlier:</p><ul><li><a href="https://www.forexlive.com/centralbank/rbas-kent-pays-lip-service-to-further-tightening-may-be-required-to-slow-inflation-20231011/" target="_blank" rel="follow" data-article-link="true">RBA's Kent pays lip service to 'further tightening may be required' to slow inflation</a></li></ul><p>—</p><p>As background to what Kent is talking about re bonds:</p><ul><li>
In its long-dated outright transactions, the Reserve Bank purchases government securities with terms to maturity generally greater than 18 months. </li><li>Prior to March 2020, the Reserve Bank typically undertook these transactions on a quarterly basis, and in relatively small quantities, to replenish the holdings of securities used for liquidity management purposes.
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Following a series of decisions taken by the Reserve Bank Board since March 2020, the Reserve Bank for a time purchased government securities for monetary policy purposes. Australian Government Securities (AGS) were purchased to support a target for the yield on an Australian Government bond further out the yield curve than the cash rate – the yield target was discontinued on 2 November 2021. </li><li>The Bank also purchased AGS and semi-government securities (semis) as part of a bond purchase program to lower longer-term yields and, if required, to address market dislocations. </li><li>On 1 February 2022 it was announced that purchases under the bond purchase program would cease after 10 February 2022.</li></ul>
This article was written by Eamonn Sheridan at www.forexlive.com.
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