We began raising interest rates in March 2022 and shrinking our securities holdings in June in order to bring inflation down to our 2 percent target.1 Today I thought I would spend a few minutes taking stock of the year behind us and talking about what's next.
This reduction in demand to borrow Australian dollars in the swap market has seen the basis on both short-term and long-term swaps fall to low, or even negative, levels. Indeed, for a brief period, the premium on very short-term swaps dropped very sharply, to as low as −175 basis points for 1-week swaps (Graph 2).