Reviews of the Monetary Policies Adopted in Response to COVID-19

The purpose of the reviews is to be transparent and open about the experience and draw out lessons for the future.

Supporting the Economy and Financial System in Response to COVID-19 – a look back at what the RBA did during the pandemic.

Review of the Term Funding Facility

In March 2020, the Reserve Bank Board announced the Term Funding Facility (TFF) as part of a policy package to support the Australian economy in response to the COVID-19 pandemic, at a time when wholesale funding markets had been significantly disrupted. Banks drew a total of $188 billion from the TFF, with all funds repaid by mid-2024 without incident. The Review of the Term Funding Facility examines the TFF’s effectiveness and draws some key lessons from the experience.

Review of the Yield Target

In March 2020, the Reserve Bank Board introduced a target for the yield on the three-year Australian Government bond. The target was discontinued in November 2021. The Review of the Yield Target examines the experience with the yield target and draws lessons from this experience.

Review of the Bond Purchase Program

In November 2020, the Reserve Bank Board introduced a bond purchase program (BPP) as part of a second package of monetary policy measures designed to lower the structure of interest rates in Australia. The BPP ultimately involved the purchase of a total of $281 billion of Australian, state and territory government bonds between November 2020 and February 2022. The Review of the Bond Purchase Program examines the experience with the BPP and draws some key lessons.

Review of the RBA’s Approach to Forward Guidance

As was the case for many other central banks during the pandemic, the RBA used forward guidance on the cash rate to strengthen the impact of its monetary policies. Previously, the RBA had used forward guidance to varying degrees, with the guidance being generally qualitative in nature. However, during the pandemic, forward guidance was more specific and formed a prominent part of the RBA’s package of policy responses. Since raising the cash rate earlier this year, the forward guidance has returned from this stronger, more specific form to its earlier, more qualitative form. The Review of the RBA’s Approach to Forward Guidance examines the RBA’s use of forward guidance regarding the cash rate over the COVID-19 pandemic period and discusses the approach going forward.