What we know about the August RBA meeting
We can be pretty sure the RBA will downgrade and dump the taper. I think there’s a chance they say that YCC’s not dead, just frozen. Boosting QE to 6bn per week seems unlikely to me.
Month: July 2021
What can the RBA do?
What can the RBA do? Faster QE will take RBA ownership of mid-curve ACGBs to 50%. They should consider buying Ultras and increasing the share of Semis. And rolling YCC to Nov’24.
Payrolls & COVID
The economy was already shedding jobs in early July. The outlook is for more weakness.
July RBA minutes set up for QE-taper reversal
RBA minutes confirm that the decision to taper to 4bn/wk was a close run thing & set up a reversal (due to COVID downgrades) in August.
RBA regrets the July taper
The AFR’s John Kehoe reports that the RBA would not have tapered on 6 July if they’d foreseen the lockdowns. I think the RBA will reverse that decision on 3 August. It would be good strategy to remind the market that YCC’s not dead, it’s just frozen.
From expansion back to recovery?
COVID lockdowns have over-taken the RBA’s recent upgrade of the current assessment from ‘recovery’ to ‘expansion’. A contraction in Q3 would extend the life of QE and boost the peak-size of the RBA’s balance sheet.
ricardian ambivalence 