In a hopeful sign of increased transparency, the RBA has announced a 4pm press conference to unpack today’s announcements. Here are 9 questions that RBA should be asked about it’s new monetary policy package!
1) In March 25 bp was declared the effective lower bound. Now you have announced that 10bp is the lower bound. Will you announce another drop in the interest rate floor in 2021?
2) $100 billion is a suspiciously round number, how was it determined?
3) Doesn’t the reduction on the interest rate on the TFF on *new* drawings only, encourage banks to hold off from tapping the facility in case it gets lowered again?
4) Under what conditions would you consider lowering the interest rate on the TFF to 0%? What about a negative interest rate for the TFF as the ECB has done?
5) The AUD fell on your announcement. Would a bigger package have driven a larger fall in the dollar?
6) Following up, wouldn’t a weaker AUD boost jobs and help inflation return to target quicker? What is the downside?
7) Other than government debt did the RBA consider buying another other type of asset?
8) Under what conditions would you consider buying equities (as the Bank of Japan does), foreign assets (as Switzerland has done) or corporate debt (a la the Federal Reserve)?
9) In March the RBA announced that interest rates would stay low for 3 years. 8 months later you still claim that rates will be low for 3 years. When will this forward guidance decrease in length? Does the RBA have an exit plan for yield curve control?