The changes made to the TFF (see here) include a new 'supplementary funding allowance' to become available to the banking system when the window for accessing their initial allowances ($84bn in total) closes at the end of September. This has been assessed by the RBA to open up an additional $57bn in 3-year liquidity fixed at 0.25% between 1 October and 30 June 2021. As a result, the maximum size of the TFF will advance from around $150bn to around $200bn. The other change was a 3-month extension of the deadline banks will have for accessing their additional allowances (currently around $70bn in total) from March to June 2021.
There were several other points of interest in today's statement. Overall, the tone clearly slanted towards a more accommodative stance going forward, with the governor noting the Board will continue to "consider how further monetary measures could support the recovery". After the restart of the RBA's bond-buying activity was commenced following the August meeting, an additional $10bn of Australian Government bonds were bought (total of $61bn) with the governor pledging that "further purchases will be undertaken as necessary". The prospect for more policy support comes amid strengthening in the Australian dollar that was assessed as being "around its highest level in nearly two years". Meanwhile, Governor Lowe noted the ongoing importance of the role of fiscal policy and with public sector balance sheets being "in good shape" he outlined that there was scope for more support to be forthcoming.
Comments on the economy reiterated the RBA's outlook from the recent Statement on Monetary Policy in pointing to a more uncertain and less robust economic recovery through 2021, but from a slightly better starting point with the impact of the initial national shutdown to contain the pandemic assessed as being less severe than previously expected.
