Market Over-Excited About Quantitative Easing in Australia, UBS’s Anderson Says

(Bloomberg) -- UBS Asset Management Australia’s Anne Anderson says that despite “a lot of chatter” about quantitative easing, policy makers are likely to opt for an extended period of low interest rates and targeted fiscal policy to support the economy Down Under.

“It is still a very long way away for Australia, if at all,” Anderson, head of fixed income, said of a bond-buying program in an interview with Bloomberg Television in Sydney Thursday. They’re exploring it, “as a prudent regulator and government should, but I just think there’s other things that will be done before we get to that policy.”

Anderson identified fiscal measures and “very accommodative monetary policy” as the main responses. She didn’t go into detail on what Treasurer Josh Frydenberg and his colleagues might do to stimulate growth.

Anderson’s comments on the need for government to step up echo Goldman Sachs Group Inc.’s Andrew Boak and Westpac Banking Corp.’s Bill Evans who in recent days urged authorities to bring forward income tax cuts to 2020. The Reserve Bank cut rates three times since June and may only have one more conventional reduction available before it reaches the lower bound of policy.

Still, the government has resisted calls to loosen the purse strings, instead restating its plan to return the books to the black. Prime Minister Scott Morrison pledged to deliver a budget surplus in the May election he unexpectedly won and is loath to break that commitment given it was the centerpiece of his message on strong economic management.

To contact the reporter on this story: Sybilla Gross in Sydney at sgross61@bloomberg.net

To contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net, Michael Heath, Jiyeun Lee

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