“The main downside risks are new Delta outbreaks and new strains of the virus“said the Governor of the Reserve Bank of Australia (RBA), Philip Lowe, during the early hours of Tuesday.
The RBA president spoke on the topic “Delta, the economy and monetary policy” at an online event organized by the Anika Foundation.
Key Comments (via Reuters)
Cash rate unlikely to increase before 2024, given the slow growth of wages.
Rates could go up in other countries, but domestic factors are different.
The Board judged the best fiscal policy response current locks.
Monetary policy could do little to offset the hit to demand in the third and fourth trimesters.
The extension of the purchase of bonds until February reflected a delay in the recovery.
The outbreak is a significant setback, an added element of uncertainty.
Third quarter GDP could fall by at least 2%, the contraction due to risk could be significantly higher.
The unemployment rate could reach the percentage of “high fives” and the hours worked fall between 3% and 4% in the third quarter.
The economy is expected to grow again in the fourth quarter and the recovery continues through 2022.
Spending should be supported by higher savings and boost household wealth from house prices.
Low interest rates contribute to higher home prices.
Australia has made significant progress on the vaccination front.
The main downside risks are new Delta outbreaks and new strains of the virus.
The Delta outbreak has delayed, but not derailed, the economic recovery.
Additional comments
Getting faster pay growth would benefit everyone in Australia.
The cash rate is not going to be increased until inflation is in the 2-3% range.
The bond purchase is expected to be reduced and completed before increasing the cash rate.
You cannot keep buying bonds forever.
It is likely that stop buying bonds sometime next year.
You have learned not to forecast the price of the AUD, the currency is not counted on to drive the recovery.
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