Philip Lowe Reserve Bank
Reserve Bank governor Philip Lowe (Image: AAP/Joel Carrett)

Tomorrow’s July meeting of the Reserve Bank may be every bit as important as its decisions in March 2020, which established the monetary policy side of the pandemic stimulus.

Starting in March it cut the cash rate to the all-time low of 0.25%, and 0.1% eight months later, started a unique yield control plan to keep the cash rate at 0.25% and then 0.1% for three years, set up a term funding facility to help banks continue to lend money (which ended last week on June 30), and targeted the 10-year bond rate via a $100 billion bond-buying campaign -- or quantitative easing -- which capped the strength of the Aussie dollar despite a commodities boom.

Tuesday’s meeting will see no change in the cash rate, nor in the continuation of quantitative easing, although there could be a phased reduction in the monthly bond buying and perhaps a date later this year to again review the policy.