and now they are also sending small businesses to the wall Reserve Bank of Australia reports $37 billion loss
By John Beveridge
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September 26, 2022
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In 2021-2022 the Reserve Bank of Australia recorded an accounting loss of $36.7 billion. FacebookTwitterLinkedInEmailPrint
It’s just as well the Reserve Bank of Australia is in the business of pushing for economic stability and full employment, because as an investor it is no good.
All of the people who sold an amazing $300 billion of state and Federal Government bonds to the RBA during the COVID-19 pandemic must be absolutely delighted to have had such a willing buyer of their super-low yield bonds.
With the RBA later forced into a rapid U-turn and raising interest rates in an effort to dampen demand and get inflation back under control, those low-yield bonds became a form of financial kryptonite, going through a large and growing negative capital loss.
More losses to come
Those losses will continue to mount as rates keep climbing but already they have been big enough to push the RBA into its largest ever loss of almost $37 billion.
It is even worse when you look into the details – the actual conventional operations of the RBA still churned out underlying profits of $8.2 billion which would normally be partly available to the Federal Government to bolster its budget position.
Instead, these profits were totally swallowed by the $44.9 billion valuation loss on all of those bonds it had recently bought.
That is a serious amount of money, especially when you consider that the RBA was hoovering up these bonds at a rate of $5 billion a week at the worst and most locked-down times of the pandemic.
