“Main downside risks are new delta outbreaks, new strains of virus,” said Reserve Bank of Australia (RBA) Governor Philip Lowe during early Tuesday.
The RBA Boss spoke on the topic “Delta, the Economy and Monetary Policy” at an online event hosted by Anika Foundation.
Key quotes (from Reuters)
Cash rate unlikely to rise before 2024 given sluggish wage growth.
Rates might rise in other countries but domesitc factors different.
Board judged fiscal policy best response to current delta lockdowns.
Little monetary policy could do to offset hit to demand in Q3 and Q4.
Extension in bond buying to February reflected delayed recovery.
Outbreak is a significant setback, an added element of uncertainty.
Q3 gdp likely to shrink by at least 2%, risk contraction could be significantly larger.
Unemployment rate could reach "high fives" percentage, hours worked fall 3-4% in Q3.
Expects economy to be growing again in Q4, recovery continuing into 2022.
Spending to be supported by higher savings, boost to household wealth from house prices.
Low interest rates contributing to higher house pricies.
Housing affordability best not addressed by higher rates or curbs on leniding.
Australia has made significant progress on the vaccination front.
Main downside risks are new delta outbreaks, new strains of virus.
Delta outbreak has delayed, not derailed economic recovery.
AUD/USD drops 15 pip after the comments
Following the news, AUD/USD refreshed intraday low to 0.7354, down 0.07% intrady around 0.7363 by the press time.
Getting faster wage growth would benefit everyone in Australia.
Not going to raise cash rate until inflation in 2-3% range.
Expect to taper bond buying and stop before raise cash rate.
Cannot continue buying bonds forever.
Likely to stop buying bonds sometime next year.
Has learned not to forecast AUD, not counting on the currency to drive the recovery.
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