RBA’s Lowe: Effectiveness of yield target as a monetary policy tool declined

The yield target has been effective and has supported the recovery of the Australian economy.

But its effectiveness as a monetary policy tool declined as expectations about future interest rates shifted due to the run of data and the forecast progress towards our goals.

I want to make it clear that this decision does not reflect a view that the cash rate will be increased before 2024.

There is genuine uncertainty as to the timing of future adjustments in the cash rate.

It is still entirely possible that the cash rate will remain at its current level until 2024.

Our forward guidance is based on the state of the economy, not the calendar.

The latest data and forecasts do not warrant an increase in the cash rate in 2022.

We will be including the April 2024 bond in our regular auctions from next week.

Underlying inflation reached the midpoint of the target range for the first time in seven years does not, by itself, warrant an increase in the cash rate.

Configuration of inflation and wages growth allows the board to be patient in considering a lift in interest rates.

Board judged that it was no longer sustainable to maintain the target of 10 basis points.

Prepared to look through spikes in the inflation rate.