Modern Monetary Theory (MMT) Love it or Hate it - it's not going to go Away!, page-35

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CafeCafe

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26/08/20

15:03

Post #: 46836304
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Originally posted by CafeCafe: ↑

RBA defines Asset Purchases (Quantitative Easing)
https://www.rba.gov.au/education/resources/explainers/unconventional-monetary-policy.html
Asset purchases (quantitative easing)
Asset purchases – also known as quantitative easing (QE) – involves the outright purchase of assets by the central bank from the private sector with the central bank paying for these assets by creating ‘central bank reserves’
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Then in March when RBA announced their unconventional monetary policy Dr Lowe explains:

https://www.rba.gov.au/speeches/2020/sp-gov-2020-03-19.html
"....I want to make it clear that our purchases will be in the secondary market and we will not be purchasing bonds directly from the Government...I understand why many people will view this as quantitative easing – or QE. This is because there is a quantitative aspect to what we are doing – achieving this target will involve the Reserve Bank buying bonds and an expansion of our balance sheet. But our emphasis is not on the quantities – we are not setting objectives for the quantity and timing of bonds that we will buy, as some other central banks have done..."

I don't know why Lowe seems to think 'quantities' are the defining feature of quantitative easing. The RBA's own definition does not make this distinction so why Lowe uses this Clayton's reasoning. "The quantitative easing you have when your not having quantitative easing"
By the RBAs very definition the unconventional monetary policies of asset purchases, announced in March, was Quantitative Easing just like in Fed Reserve QE operations.

The money from asset purchases largely stays in the banks ESB to maintain target interest rates. Very little of QE money enters the money supply.

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To be fair I should include this from RBA definition of Quantitative Easing:
"...Typically, when a central bank undertakes asset purchases, it can either set a target for the quantity of assets it will purchase (at any price) or a target for the price of an asset (purchasing whatever quantity of assets will achieve that price), whereby the price of an asset is equivalent to its interest rate."

But this does not support Lowe's downplaying of RBA implementing QE
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