RBA extends government bond puchasing programme

Credit: REUTERS/DANIEL MUNOZ

The Reserve Bank of Australia will continue its bond-buying programme today with plans to purchase A$3bn (US$1.8bn) of Commonwealth government bonds (ACGBs) with maturities between May 2021 and April 2024.

Fixes typo in headline

SYDNEY, March 26 (IFR) - The Reserve Bank of Australia will continue its bond-buying programme today with plans to purchase A$3bn (US$1.8bn) of Commonwealth government bonds (ACGBs) with maturities between May 2021 and April 2024.

This will be the RBA’s fourth round of ACGB purchases since introducing open-ended quantitative easing on March 19. It then set a three-year yield target of 0.25% – in line with the new, record-low cash rate – to help ensure cheap credit is available across the economy.

In the previous three rounds the RBA purchased a combined A$13bn of ACGBs which has helped reduce secondary market yields and flatten the sovereign curve.

Yields on the 5.5% April 2023s have tumbled from 0.62% to around 0.30% currently, while 10-year ACGB yields, a more recognised market benchmark, have fallen to 0.91%, well below a brief 1.65% intraday spike on March 19, just before QE was announced.

ACGB 10-year yields had troughed at 0.60% on March 9, before investors took fright at the scale of Australian and global fiscal spending plans and resultant government bond supply.

Yesterday the RBA extended QE into the semi-government sector to help compensate for shrinking state revenues.

Local tax takes have declined as economic activity contracts with usually hefty stamp duty receipts suffering a particularly severe hit as property sales dry up.

The reserve bank bought A$2bn of 25 semi bonds, covering eight states and territories, with maturities between January 2026 and June 2030.

(Reporting by John Weavers; Editing by Vincent Baby)

((john.weavers@thomsonreuters.com; 612 9373 1655; Reuters Messaging: john.weavers.thomsonreuters.com@reuters.net))

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