By Swati Pandey

SYDNEY (Reuters) – Australia’s central bank is assessing various monetary policy options including currency market intervention and negative rates to meet its inflation and employment goals, Deputy Governor Guy Debelle said on Tuesday.

The Reserve Bank of Australia (RBA) had slashed interest rates to a record low 0.25% in an emergency meeting in mid-March to backstop the economy from the coronavirus crisis.

It also launched an “unlimited” government bond buying programme and a cheap funding facility for banks. It has held rates since then, saying it would maintain its “highly accommodative settings” as long as required to support the flagging economy.

On Tuesday, Debelle said the board was assessing other policy options “given the outlook for inflation and employment is not consistent with the Bank’s objectives over the period ahead.

One option being considered is buying government bonds with maturities beyond three years. The RBA is currently targeting three-year yield at 0.25%.

Foreign exchange intervention was another potential tool, though Debelle said it was not clear whether this would be effective given the Australian dollar was “aligned with fundamentals.” [AUD/]

A third option would be to lower the cash rate without taking it into negative territory. And, the final option was negative rates, though Debelle said the empirical evidence on its success was mixed.

The RBA has previously said on multiple occasions that negative rates were “extraordinarily unlikely” in Australia and Debelle reaffirmed that stance.

The Australian dollar fell briefly below 72 U.S. cents after the speech but pared some of the losses to last fetch $0.7223.

“The nuance in our view was slightly dovish,” RBC economist Su-lin Ong said.

The RBA’s easing bias was also reinforced by Debelle’s emphasis on a bumpy and uneven recovery and challenging labour market outlook.

“By continuing to highlight other policy measures without committing to any timelines, especially ahead of the upcoming 2020/21 Commonwealth Budget, the RBA is employing maximum flexibility,” Ong added.

The Budget is due on Oct.6

“In these uncertain times, that would appear prudent.”