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

The Reserve Bank of Australia (RBA) has taken a small but well signalled step towards normalising monetary policy by sometime in 2024, by trimming its multi-billion-dollar bond purchases by 20% a week and signalling the 0.10% cash rate will likely change sometime in 2024.

Reserve Bank governor Philip Lowe announced in a post-meeting statement on Tuesday that the RBA won't extend its bond targeting program to the November 2024 bond, saying it was pleased with the economy’s recovery but still sees a long way to go until its inflation and wages goals are met.

Today's meeting was flagged as a key decision point as to whether, in order to maintain bond yields at 0.1%, the bank would begin purchases of the November 2024 bond after its focus to date on the April 2024 bond. Such a move would have indicated it was not confident economic conditions would warrant tightening until 2025. Instead, Lowe announced the bank would "retain the April 2024 bond as the bond for the yield target and retain the target of 10 basis points".