It’s the end of ultra-cheap money in Australia

The Reserve Bank of Australia had a surprise in store for the country on Tuesday, announcing it was abandoning its policy of “yield curve control,” meaning it was no longer going to defend any particular interest rate for borrowing over any particular duration.

Until now it had a formal target for the three-year bond yield of 0.10%, enabling banks to provide three-year fixed mortgages very cheaply, and indicating the cash rate wouldn’t climb above 0.10% until the most recent three-year bond expires in April 2024.

But it has now abandoned the target, a full two years early.

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