Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Australia central bank will trim bond buying even as Delta variant slams economy

EconomyAug 03, 2021 06:35
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Pedestrians walk past the main entrance to the Reserve Bank of Australia (RBA) head office in central Sydney, Australia, October 3, 2016. Picture taken October 3, 2016. REUTERS/David Gray/File Photo

SYDNEY (Reuters) - Australia's central bank surprised markets on Tuesday by standing its ground on a decision to taper its bond buying programme from September even as a fast-spreading Delta variant wrecks havoc in the economy.

The Reserve Bank of Australia (RBA) kept its cash rate at 0.1% for its eighth straight meeting, in a widely expected move. It reiterated interest rates will not be raised until inflation was sustainably within its 2-3% target band, a goal unlikely to be met before 2024.

The RBA also affirmed its decision made in July to trim its purchases of government bonds to A$4 billion a week from September from the current weekly pace of A$5 billion, surprising markets betting on higher or steady purchases.

The move sent the Aussie dollar to a day's high of $0.7408.

In a short post-meeting statement RBA Governor Philip Lowe struck an upbeat note about Australia's economy, which recovered from a pandemic-induced recession of 2020 much stronger than expected.

"The recent outbreaks of the virus are, however, interrupting the recovery and GDP is expected to decline in the September quarter," Lowe said.

The highly transmissible Delta variant of the coronavirus has taken hold in Sydney with close to 4,000 infections since mid-June despite weeks of lockdown.

"The experience to date has been that once virus outbreaks are contained, the economy bounces back quickly," Lowe said.

He noted the economy was benefiting from "significant" policy support, adding the ongoing COVID-19 immunisation plan will also assist with the recovery.

Queensland state is also battling a smaller outbreak with Brisbane, Gold Coast and Sunshine Coast under stringent stay-home orders. Australia's second-most populous city of Melbourne came out of a two-week lockdown last month after controlling its Delta outbreak.

Lowe said the economic outlook for the coming months was "uncertain", though the RBA expects 2.5% GDP growth in 2023, on top of a "little over 4%" in 2022.

The RBA still does not expect a remarkable pick-up in wages growth and inflation, which means the cash rate will remain at record lows for a long time to come.

Australia central bank will trim bond buying even as Delta variant slams economy
 

Related Articles

U.S. dollar gains, tracks rise in Treasury yields
U.S. dollar gains, tracks rise in Treasury yields By Reuters - Sep 27, 2021

By Gertrude Chavez-Dreyfuss NEW YORK (Reuters) -The U.S. dollar advanced for a second straight session on Monday, bolstered by the rise in Treasury yields ahead of a slew of...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Drake Richards
Drake Richards Aug 03, 2021 7:43
Saved. See Saved Items.
This comment has already been saved in your Saved Items
a vaccination rate that would shame a tin pot African banana republic
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email