AUSTRALIA’S central bank expects “very significant” monetary support will be needed for some time as it’ll take years to meet its inflation and unemployment goals, according to minutes of its February meeting, when the board extended a quantitative easing (QE) program.

“The bond purchase program had helped to lower interest rates and had contributed to a lower exchange rate than otherwise,” the Reserve Bank of Australia (RBA) said in the minutes released in Sydney Tuesday. “Given this, it would be premature to consider withdrawing monetary stimulus.”

The RBA announced two weeks ago it was extending its QE program by a further A$100 billion ($77.9 billion) and doesn’t expect to raise interest rates until 2024. Governor Philip Lowe and his board are trying to keep close to global peers that have sought to stamp out premature tapering speculation.

“A number of central banks in other advanced economies had announced extensions of their bond purchase programs to at least the end of 2021,” the RBA said, adding that there was widespread market expectation that its program would also be extended in some form. If the central bank had allowed QE to end in mid-April, the currency would likely have risen, it said.

“Members concluded that very significant monetary support would be required for some time, as it would be some years before the bank’s goals for inflation and unemployment were achieved,” the RBA added.

While Australia is enjoying a V-shaped recovery with COVID-19 largely under control, boosting confidence and fueling spending and hiring, the economy’s small stature in the global monetary marketplace requires the RBA to stay in the slipstream of major central banks. If Australia were to step outside that line, it would risk sending the currency soaring and damage exports and jobs.

In November, the RBA cut its cash rate, three-year yield target and rate on a bank lending facility to 0.10%. It also announced a six-month, A$100-billion bond-buying program targeting longer-dated securities to catch up with offshore counterparts.

The central bank said today the board would need to consider later in the year whether to shift the focus of the yield target from the April 2024 bond to the November 2024 bond. “In considering this issue, members would give close attention to the flow of economic data and the outlook for inflation and employment,” it said.

The central bank said it’s monitoring the effects of easy policy on the economy and said there were few signs of lending standards deteriorating at this point.

The RBA “acknowledged the risks inherent in investors searching for yield in a low interest rate environment, including risks linked to higher leverage and asset prices, particularly the housing market. It said “the board concluded that there were greater benefits for financial stability from a stronger economy.”

The RBA earlier this month released updated forecasts showing Australia’s economy will grow 3.5% over both 2021 and 2022 and unemployment will fall to around 6% by the end of this year and 5.5% at the end of 2022. Economists predict the jobless rate slid to 6.5% in January ahead of labor force data due Thursday.

The RBA remains concerned about how Australia’s economy will cope with some government programs expiring, with the signature job subsidy due to conclude at the end of March.

“An important near-term issue was how households and businesses would adjust to the tapering of some fiscal support measures and to what extent they would use their stronger balance sheets to support spending,” the central bank said. — Bloomberg