RBA: Worried about the bond market rout? – AMP’s Oliver

Dr. Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital – Australia’s largest life insurer and huge fund manager, offered his expectations from Tuesday’s Reserve Bank of Australia (RBA) monetary policy decision.

Key quotes

“It will likely try and push back against the rise in bond yields by reiterating that the economy still faces uncertainties and has a fair way to go to meet the RBA's inflation and employment goals and that it does not expect the conditions to be met for a rate hike until at least 2024.”

“RBA likely to confirm that it has stepped up its buying of 3-year bonds in order to maintain the yield target of 0.1%.”

“RBA will be worried that the bond market is jumping at shadows - at least in part - ... Particularly given that if they give in and remove easing too quickly the $A will spike even higher.”

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