Governor Lowe of the Reserve Bank of Australia (RBA) has indicated that he is ready to increase the size of bond purchases if necessary. He made further statements, the most prominent of which are as follows:
The Australian financial system is resilient and is well placed to handle Covid-19
Existing capital and liquidity reserves can be used if necessary to support the economy
It is important that lenders continue to support the flow of credit to the economy
The future remains unusually uncertain
One obvious source of uncertainty is the frequency with which various restrictions are eased
Another source of uncertainty is the level of confidence people have about their future
The critical issue for us here in Australia is to restore people's confidence
We are ready to increase bond purchases again if necessary
There is a limit to what can be achieved through monetary policy
Trust is extremely fragile, and restoring it is key. It is not appropriate to tighten monetary policy until we have strong growth
The bank is still not thinking of negative rates and is unlikely to adopt such measures
