First, the yield target reinforces the Board's forward guidance on the cash rate. Three years is a reasonable horizon over which the Board has some confidence about the economic outlook. Beyond that horizon, the economic outlook is considerably less certain and with it, confidence about the settings of monetary policy.
The slowdown in activity lowers investor demand for risky assets, thereby raising spreads and depressing valuations. In turn, business losses accumulate, and delinquencies and defaults rise, reducing the willingness or the ability of banks to lend.