3-year Australian Government Bond Yield Target

Over recent decades, the Reserve Bank has targeted the overnight cash rate. The Bank has extended this by also targeting a risk-free interest rate further out along the yield curve to help lower funding costs across the economy. On 19 March 2020, the Board announced a target for the yield on the 3-year Australian Government bond of around 0.25 per cent. On 3 November 2020, the Board announced a reduction of this target to around 0.1 per cent.

The Bank stands ready to purchase government bonds in the secondary market to help achieve this target.

The 3-year Australian Government bond yield graph below displays interactive information.

The Reserve Bank also announced on 3 November 2020 that it would purchase bonds issued by the Australian Government as well as by the states and territories in the secondary market under a $100 billion bond purchase program. Under this program, the Bank plans to buy $100 billion of government bonds over approximately 6 months, focusing on bonds with maturities of around 5 to 10 years. Together with the target on the 3-year Australian Government bond, these bond purchases will help lower the whole structure of interest rates in Australia. This helps to support the economy through the normal transmission mechanisms of monetary policy, including lower borrowing costs, a lower exchange rate than otherwise and higher asset prices.