By Matthew Haupt

The Reserve Bank of Australia has signalled its intention to more meaningfully utilise the unconventional and controversial monetary policy tool known as quantitative easing. While the effectiveness of QE in stimulating the economy is questionable, the impact to financial markets will be significant. We believe the RBA will announce an extended QE program shortly, perhaps alongside the near-certain cash rate reduction on November. The RBA has long-held reservations about QE and conducted very limited bond-buying at the onset of the coronavirus, preferring targeted support through the Term Funding Facility and cash rate reductions. But the RBA now appears to believe it is approaching the threshold to pull this lever, with recent justifications from deputy governor Guy Debelle and positive notes from staffers.

Read more in the Australian Financial Review.