• Email Us: [email protected]
  • Contact Us: +1 718 874 1545
  • Skip to main content
  • Skip to primary sidebar

Medical Market Report

  • Home
  • All Reports
  • About Us
  • Contact Us

Australia central bank to stick with tapering plans, or maybe not

September 3, 2021 by David Barret Leave a Comment

September 3, 2021

By Wayne Cole

SYDNEY (Reuters) – Analysts are split on whether the Reserve Bank of Australia (RBA) will delay tapering plans at its September policy meeting next week, as a faster roll out of coronavirus vaccines offsets a harder-than-expected economic blow from lockdowns.

Some 36 of 37 analysts polled by Reuters expect the cash rate to stay at 0.1%, where it has been since a cut last November. This is no surprise given the RBA still argues a hike is unlikely until 2024 when it hopes wage growth and inflation will have finally picked up to desired levels.

More uncertain is whether it will delay a taper of its A$5 billion in weekly bond buying, part of a package of stimulus measures enacted last year as the economy was emerging from a pandemic-driven recession.

The bank surprised many in August by sticking with plans to cut its bond buying to A$4 billion a week starting this month. Since then, the spread of the Delta variant has shut more cities and is set to cause a vicious contraction this quarter.

Yet of the 25 analysts that responded, 15 said the bank would not delay the taper and only 10 that it would.

Fewer wanted to comment on whether the RBA should delay, but of those that answered five said they should pause and 10 that they should go ahead and taper.

The main argument for a pause is that the economic damage done by harsh lockdowns in Sydney, Melbourne and Canberra will be greater than the RBA first expected and the likely recovery more prolonged given restrictions will only be eased gradually.

David Plank, ANZ’s head of Australian economics, also argues that the outlook for next year has been clouded by the global spread of Delta combined with the slowdown in China.

“In our view, the prospect of a weaker starting point and greater risks around the 2022 outlook support a policy response by the RBA, even if the central scenario of a strong rebound next year is intact,” said Plank.

As a result, he argues the RBA should delay tapering until at least the November Board meeting to see how events develop, not least of which is the pace of vaccinations.

The federal government has a plan to ease restrictions once 70% of the adult population are vaccinated and to abandon mass lockdowns altogether at 80%, though not all the states are on board with this vision.

After a slow start, Australia has now fully vaccinated 36.4% of the 16+ population, while 60.5% have at least one dose. Currently it is on track for 70% fully vaccinated by October and 80% by November.

The RBA’s argument last month was that fiscal stimulus was the appropriate response to this crisis rather than monetary policy. Also, buying A$5 billion of bonds a week rather than A$4 billion would have only a “marginal” effect at present for an economy with an annual GDP of A$2 trillion.

“We think the RBA will stick with its modest QE taper plan,” said Nomura economist Andrew Ticehurst. “

“Progressive government reopening plans form part of this thinking, and should offset an expected sharp decline in Q3 GDP, which we acknowledge will likely be weaker than the RBA expected a month ago.”

(Reporting by Wayne Cole; polling by Md. Manzer Hussain and Vivek Mishra; Editing by Simon Cameron-Moore; ​)

Source Link Australia central bank to stick with tapering plans, or maybe not

David Barret
David Barret

Related posts:

  1. MLB roundup: Dodgers take over NL West lead
  2. China develops prototype miniature helicopter for Mars missions
  3. U.S. second-quarter productivity revised lower
  4. Seeking re-election, Czech PM pledges to keep migrants, Brussels at bay

Filed Under: News

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

  • What Is An Einstein Cross – And Why Is The Latest One Such A Unique Find?
  • If We Found Life On Mars, What Would That Mean For The Fermi Paradox And The Great Filter?
  • The Longest Living Mammals Are Giants That Live Up To 200 Years In The Icy Arctic
  • Entirely New Virus Detected In Bat Urine, And It’s Only The 4th Of Its Kind Ever Isolated
  • The First Ever Full Asteroid History: From Its Doomed Discovery To Collecting Its Meteorites
  • World’s Oldest Pachycephalosaur Fossil Pushes Back These Dinosaurs’ Emergence By 15 Million Years
  • The Hole In The Ozone Layer Is Healing And On Track For Full Recovery In The 21st Century, Thanks To Science
  • First Sweet Potato Genome Reveals They’re Hybrids With A Puzzling Past And 6 Sets Of Chromosomes
  • Why Is The Top Of Canada So Sparsely Populated? Meet The “Canadian Shield”
  • Humans Are In The Middle Of “A Great Evolutionary Transition”, New Paper Claims
  • Why Do Some Toilets Have Two Flush Buttons?
  • 130-Year-Old Butter Additive Discovered In Danish Basement Contains Bacteria From The 1890s
  • Prehistoric Humans Made Necklaces From Marine Mollusk Fossils 20,000 Years Ago
  • Zond 5: In 1968 Two Soviet Steppe Tortoises Beat Humans To Orbiting Around The Moon
  • Why Cats Adapted This Defense Mechanism From Snakes
  • Mother Orca Seen Carrying Dead Calf Once Again On Washington Coast
  • A Busy Spider Season Is Brewing: Why This Fall Could See A Boom Of Arachnid Activity
  • What Alternatives Are There To The Big Bang Model?
  • Magnetic Flip Seen Around First Photographed Black Hole Pushes “Models To The Limit”
  • Something Out Of Nothing: New Approach Mimics Matter Creation Using Superfluid Helium
  • Business
  • Health
  • News
  • Science
  • Technology
  • +1 718 874 1545
  • +91 78878 22626
  • [email protected]
Office Address
Prudour Pvt. Ltd. 420 Lexington Avenue Suite 300 New York City, NY 10170.

Powered by Prudour Network

Copyrights © 2025 · Medical Market Report. All Rights Reserved.

Go to mobile version