RBA: QE has not had any substantial negative impact on the functioning of Australian bond markets

The Reserve Bank of Australia (RBA) is out with its June issue of the economic bulletin, offering insights into the economy and the financial system.

Summary of the bulletin

“The bond purchase program has not had any substantial negative impact on the functioning of government bond markets.”

“In response to the COVID-19 pandemic, the Reserve Bank deployed a number of monetary policy tools, including some new measures, to support the economy and address disruptions to the smooth functioning of financial markets. “

“This new mix of policy tools has changed how the Reserve Bank implements monetary policy, and has significantly increased the size of the Bank’s balance sheet and the amount of liquidity in the banking system.”

“Underemployment in Australia has been moving higher for several decades.”

This article reviews the trends that have been driving this, including the long-run increase in part-time employment and changes in how the labor market adjusts to fluctuations in labor demand.”

‘The article also discusses the implications of the upwards trend in the underemployment rate for assessing spare capacity in the labor market. One implication is that the unemployment rate may need to decline by more than has previously been the case before wage pressures start building strongly.”