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March 1, 2021, 11:45 p.m. EST

RBA says QE program can be extended if necessary

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By James Glynn

SYDNEY--The Reserve Bank of Australia launched a strident defense of its quantitative easing program on Tuesday, telling financial markets it remains committed to keeping government bond yields low to support the economy, and will use the extensive firepower at its command to achieve its goals if required.

"The Bank is prepared to make further adjustments to its purchases in response to market conditions... the Bank is prepared to do more (QE) if that is necessary," RBA Governor Philip Lowe said in a statement after the central bank's March policy meeting.

"The Board remains committed to maintaining highly supportive monetary conditions until its goals are achieved... The Board does not expect these conditions to be met until 2024 at the earliest," he added.

The comments come as improving economic fundamentals and the rollout of Covid-19 vaccines put upward pressure on government bond yields globally, testing the QE programs of major central banks.

The RBA significantly ramped up its government bond purchases earlier this week, signaling its determination to keep bond yields low.

The RBA announced a $100 billion Australian dollar (US$77.72 billion) government bond-buying program in November, and rolled out an extension of equal size in February that will run until September.

As expected, the RBA's board left its official cash rate unchanged at 0.10% at the policy meeting, and also kept its target for three-year government bonds at the same level.

The RBA has its policy challenges on the domestic front, as house prices are surging thanks to record low interest rates and a glut of household savings.

Economic growth data due for release on Wednesday are expected to show the economy was hit hard in 2020 by the Covid-19 pandemic, but staged a remarkable recovery in the second half of the year.

Write to James Glynn at james.glynn@wsj.com

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