Daily Commentary BY THE CURVE TEAM –

Daily Insights – Macroprudential Reform and QE

16 November, 2021

Macroprudential Reform

  • The Macroprudential Policy Framework paper released last week hinted at potential further reforms from APRA.
  • Limiting high loan to value ratio loans is on the agenda, as is a further increase in the serviceability buffer, which they increased last night to 3% above current interest rates.
  • Mortgage rates have increased over the past month, which may lessen he need for APRA to step in.

Joye on QE4

  • Chris Joye has dubbed the phrase QE4.
  • This refers to the purchases of state and government bonds as the CLF ends next year, the TFF needs to be repaid and the RBA’s QE purchases mature.
  • Coolabah Capita forecast that $317 billion worth of state and government bonds will need to be purchased over three years.
  • This would keep yields on these bonds suppressed over the near term.
  • For the full article: https://www.livewiremarkets.com/wires/the-little-known-317bn-to-430bn-qe4-wave-that-will-swamp-qe3

RBA QE Taper

  • Following the end of the yield curve target and core inflation being in the 2-3% target band, there are calls for QE to be tapered to $2 billion a week from February.
  • The current rate of purchases is $4 billion a week until February.

Josh Stewart

Associate - Money Markets