The Reserve Bank of Australia will post a substantial accounting loss in the fiscal 2021/22 due to the bond purchase program implemented during the pandemic, Deputy Governor Michele Bullock said in a speech to Bloomberg on Wednesday.
The bond purchase program broadly achieved its aims, Bullock said in Sydney. The program was successful in lowering bond yields and support economic growth and jobs. However, she said the bank will report a large accounting loss and negative equity in 2021/22 as a result of the program.
The bank is set to incur losses over coming years as the return on its assets in the bond purchase program will be less than the interest paid on its liabilities - primarily balances in Exchange Settlement accounts.
Nonetheless, the negative equity will not affect the Bank's ability to operate effectively or perform its policy functions. And over the next few years the Bank will return to positive earnings and to positive equity, she noted.
In the Q&A session, Bullock said the monetary policy is not yet restrictive despite recent rate hikes. But the bank is looking at opportunities to slow the pace of tightening at some point, the banker added.
