The Reserve Bank of Australia’s (RBA) head of domestic markets. David Jacobs, Senior RBA stated on Wednesday that he expects the balance sheet unwinding process to go well. But he is aware of the complexities involved.
Additional quotations
“Its balance sheet is starting to unwind pandemic bond purchases; around $20 billion of purchased bonds have matured.”
“The maturities’ pace will accelerate to around A$35-45 billion per year.”
“Approximately A$4 billion in TFF funding has been repaid thus far; large maturities are due in September this year and June next year.”
“As its bond holdings decline, the process of the private sector absorbing additional issuance may put some modest upward pressure on yields.”
“Decline in ES balances will be particularly rapid as TFF rolls off; this has the potential to cause some strains.” “ES balances will remain significantly higher than pre-pandemic levels for some time, and will be sufficient for the banking system’s payment needs.”
Senior RBA statement reaction on Market
On the aforesaid comments, the AUDUSD is touching daily lows of 0.6570, down 0.53% on the day. The Australian dollar bears the brunt of the RBNZ’s dovish policy pronouncement and the market’s cautious sentiment.
Traders, on the other hand, may hesitate from putting aggressive bets. In anticipation of the release of the FOMC meeting minutes. Later this Wednesday during the US session.
