does every other holder of the maturing bond. in terms of the rba's balance sheet, there is a decrease on the asset side by the amount of the maturing bonds the rba holds. on the liability side of the rba's balance sheet there is a matching decrease in the government's deposit account at the rba, as the government uses the funds it has accumulated there to repay the rba. while the bond purchases by the rba increase liquidity in the system, i do not see this posing any risk of generating excessively high inflation in the foreseeable future. indeed, the opposite seems to be the more likely challenge in the current economic climate, that is, that inflation will remain below the rba's target. nor do i see any issue at all with the capacity of the government to repay the bonds it has issued. firstly, even with the increased issuance to fund the fiscal stimulus, the stock of government debt relative to the size of the australian economy remains low. secondly, the government is borrowing at yields that are very low historically. importantly, the yields on government debt are considerably below the long - run growth rate of the economy ; that is, is less g r than. while ever this remains the case, as olivier blanchard has highlighted, there are no concerns at all about fiscal sustainability from increased debt issuance. [ 14 ] this is because growth in the economy will work to lower government debt as a share of nominal gdp. rba4 - local. rba. gov. au / speeches / 2020 / sp - dg - 2020 - 06 - 30. html 11 / 18 30 / 06 / 2020 the reserve bank's policy actions and balance sheet | speeches | rba provide liquidity to the financial system as the dysfunction in markets intensified in march, the rba responded to the increased demand for liquidity by significantly increasing the supply of liquidity in its daily market operations. this alleviated funding pressures in the banking system and met the increase in precautionary demand for liquidity. ( the rba undertook similar actions in the financial crisis in 2007 – 08. [ 15 ] ) through march and april, the rba increased the size of its daily operations and provided regular three and six - month terms in its repo operations to meet this demand for liquidity. these operations also boosted es balances. the es balances are a liability for the rba on its balance sheet ( and a

% in the first quarter of 2005, confirming that the underlying growth dynamics remained subdued in the first half of 2005. at the same time, the most recent survey indicators have, on balance, supported the view that economic growth could improve in the second half of this year. looking further ahead, conditions continue to be in place for positive fundamental factors to influence the outlook and for economic activity to pick up beyond the short term. on the external side, ongoing growth in global demand and improvements in euro area price competitiveness should support euro area exports. on the domestic side, investment should benefit from the exceptionally low level of both nominal and real market interest rates prevailing across the entire maturity spectrum, as well as from the robust growth of corporate earnings and ongoing improvements in corporate efficiency. consumption growth should gradually rise, broadly in line with expected developments in disposable income. this picture is consistent with the most recent ecb staff projections, which envisage euro area real gdp growing at rates of between 1. 0 % and 1. 6 % in 2005 and between 1. 3 % and 2. 3 % in 2006. compared with the june projections, the ranges projected for real gdp growth have been adjusted slightly downwards. for 2005, this mainly reflects slight downward revisions of past data, while for 2006 this reflects the projected effects on disposable income of increases in oil prices. this outlook for economic activity is subject to a number of downward risks, relating mainly to higher oil prices, low consumer confidence and concerns about global imbalances. in particular, the potential further dampening impact of oil prices on the outlook for growth is being monitored very closely. oil prices have continued to rise, increasing considerably since the beginning of the year, and developments in futures prices suggest that market participants expect the current tightness in oil markets to persist. obviously, the situation has been further complicated by the tragic effects of hurricane katrina. all our thoughts are with the people of the city of new orleans and all affected neighbouring areas and we are touched by the wave of global solidarity helping them to cope with 1 / 3 their immediate needs. at the same time, it remains difficult to assess the full extent of the damage and the period of time necessary for its repair. normally, despite the significant wealth destruction resulting from such storms, the economic impact at the national level is limited to the short term and is increasingly offset by the positive impacts of rebuilding activity. at the moment, we consider that the global impact will most likely remain limited