WLTW

Willis Towers Watson Public Limited Company

231.56
USD
-1.19%
231.56
USD
-1.19%
197.63 271.87
52 weeks
52 weeks

Mkt Cap 28.85B

Shares Out 124.61M

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Australia's central bank balance sheet to shrink only slowly

SYDNEY, May 23 (Reuters) - Australia's central bank on Monday projected its A$600-billion ($423.66 billion) balance sheet would remain large for some years to come as bonds it bought under quantitative easing slowly mature and repeated it had no plans to sell its holdings early. Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent said only around A$4 billion of bonds were maturing this year, with another A$13 billion in 2023. Maturities would then range from around A$35 billion to A$47 billion a year out to 2031, before tailing off by 2033, Kent told a KangaNews bond conference. The A$188 billion lent to commercial banks under the Term Funding Facility, another emergency stimulus program begun in 2020, will also be paid in 2023 and 2024, further shrinking the size of the RBA's balance sheet. Much of the extra cash created by the QE program is held by the banks in their exchange settlement (ES) accounts at the RBA, which currently amount to about A$439 billion. This will decline as TFF loans are repaid and the RBA's bonds mature, but will likely remain larger than before the pandemic. Kent said the RBA had considered running down these ES balances more quickly but had decided that could create unwanted volatility in financial markets. This abundance of funding in turn means the actual overnight cash rate is trading slightly below the RBA's official target for the cash rate, though usually within 10 basis points of it. "Most importantly though, the Bank will continue to be able to maintain effective control over the cash rate as it withdraws monetary policy stimulus in the period ahead," said Kent. ($1 = 1.4162 Australian dollars) (Reporting by Wayne Cole; Editing by Kim Coghill) ((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net)) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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