The Reserve Bank Board meets on June 1. The minutes of the May meeting confirmed that the Board will decide on the next stage of its Yield Curve Control and Quantitative Easing policies at its July meeting. As such, the June meeting will be one of ‘marking time’ and discussing the recent run of data.
The May minutes noted that recent data and financial conditions will be factors influencing the decisions in July. Westpac expects the Board to extend the QE policy by a further $100 billion beginning in September and to switch the target bond in the YCC policy from April 2024 to Nov 2024.
This view is based on the expectation that the Board will be committed to monetary stimulus (reducing QE or restricting YCC to the April bond are akin to tightening policy) for the remainder of 2021. Despite more promising signs around momentum there is still much to achieve the Bank's objectives of full employment and its inflation target.
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