The Reserve Bank will purchase Australian government securities in the secondary market today (Wednesday), after reporting that the yield on three-year government bonds has been a little above 25 basis points in recent weeks.
The RBA set a target rate of 25 bps for three-year bonds earlier this year, and in yesterday’s statement on monetary policy it said the board decided to maintain that yield (along with the cash rate target of 25 bps).
“The yield target will remain in place until progress is being made towards the goals for full employment and inflation,” RBA governor Philip Lowe said in the statement.
Lowe said bond markets were functioning normally, despite a significant increase in issuance.
He also reported that drawings under the term funding facility were around $29 billion to date.