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Australian Credit Market Signals More Help Needed

The recent implementation of quantitative-easing measures from the Reserve Bank of Australia (RBA) has been largely welcomed by the Australian economy, yet the nation’s credit market is stating that more is needed to offset the damage being wrought by the Coronavirus pandemic.

The expected rebound in Australian credit has undershot expectations following the unprecedented announcement of the RBA purchasing government bonds in order to offset the economic impacts of a nation-wide quarantine. While economists have applauded the action, there seems to be a newly emerging consensus that the quantitative easing measures are too cautious and slow.

The supposed narrow focus of the RBA buying what appears to be exclusively government bonds and not corporate credits has been criticised as ‘treading water’ by many in the corporate sector, with many corporations seemingly missing out on RBA stimulus measures because of an alleged ‘overly cautious’ approach to monetary easing.

Compared to offshore markets, where corporate credit is considered fair game when it comes to quantitative easing, the RBA is progressing very carefully in what assets it deems purchasable in their stimulus policy.

While there has certainly been positive impact following the RBA announcement of their new monetary easing policy in the face of the Coronavirus pandemic, further liquidity could be found in the pursuance of adding corporate credit acquisition to the RBA’s arsenal.

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