The three-year bond yield is 0.13 per cent, well below the RBA’s 0.25 per cent target, but interest rates on longer-dated bonds are not falling on their own account and Australia has one of the highest 10-year government bond yields in the developed world at 0.81 per cent.
Of course, the RBA is also widely expected to lower the cash rate, the rate it lends to banks, and its target for three-year bonds, from 0.25 per cent to 0.1 per cent.
“They will step up to the plate and deliver more easing,” says Stuart Dear, Schroders’ deputy head of fixed income. “They’re likely to move to some sort of pure quantitative easing programme announcing a certain quantity of bonds they’ll buy.”
The scale of any bond buying is speculated at a $100 bil…
Read the full article at: https://www.afr.com/markets/debt-markets/the-economy-needs-help-is-qe-the-right-answer-20201029-p569ln